We may all have a friend or a relative who has decided to retire and live in Europe. This may be for the better weather, for a better lifestyle or any other reason. Many may have decided to retire to Europe. If you know someone who is affected by this, please do pass this article onto them.
As we are aware, The United Kingdom will leave the EU on 31st December 2020. Effectively, Brexit will happen on 1st January 2021.
Some high street banks are currently in the process of reviewing the bank account of UK expats and may be looking at closing their accounts.
As I write this article, a deal has not yet been finalised and therefore the information provided is based on current information.
Why are banks closing UK expats accounts?
The current arrangement is that as part of the EEA all member states use the same regulatory framework and this is known as ‘passporting’. This allows UK expats to use UK credit cards and have a UK bank account while living abroad.
Many banks are seeing how they are able to support their customers but as the deadline date of 31st December approaches, many banks are having no alternative option but to inform customers that their bank accounts will close. Many banks have already issued their letter to customers. Not all EU countries are affected by this. It may be worth confirming with your bank that they are not affected by this decision and your account will not be affected come January 2021.
Who is affected by this?
Those individuals who may be affected by this are numerous but the most common are as follows:
1: Those who have retired and require a UK bank account for their UK state pension to be paid into.
2: Individuals who have a buy to let property in the UK and have their rental income paid into the account or find it easier to have a UK bank account for costs such as landlord’s insurance or council tax.
There are a number of other individuals who may be affected by the changes and who do not fall in the above two categories.
What are the alternatives?
It may be beneficial to start looking at alternative banks, unless you already have other options in place.
Firstly, speak to your current provider to see if there are alternative options available to you. I am sure they have other customers in the same position as you and they may already have a plan in place.
It may be worth looking at alternative banks that have licenced entities in the UK and Europe. An example here would be Revolut. This is a challenger bank that is licenced in both the UK and the EU. Revolut have confirmed that they “will not be closing accounts as a result of Brexit”.
Finally, you should also consider getting an account in a local bank. You should take into account, the cost of account charges and currencies fees when looking at a local bank.
What to consider when opening a bank account?
If you decide to open a bank account with another bank, you must ensure that the bank is licenced and registered with the FCA (Financial Conduct Authority). It may be beneficial to discuss with the bank in advance their decision regarding Brexit.
Please note, this information has been provided based on current legislation and was written on 15th December 2020. Changes in the negotiations may have changed this information and therefore, always seek advice from your bank before taking any action.
We are happy to answer questions in future issues. Please send your questions to:
info@champconsultants.co.uk.
Chantal Baker, is the director and founder of Champ Consultants Ltd, an accountancy and tax consultancy practice in Caterham. Please follow us on our various social media channels and we wish you a Prosperous and Healthy 2021.
