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What will Brexit mean for your money? Key questions answered

Lisa O'Carroll, Patrick Collinson and Miles Brignall
Photograph: Alamy Stock Photo

It finally happens at 11pm on 31 January. The UK will no longer formally be a part of the European Union, a moment that is likely to prove emotional for many, whichever side of the debate you are on. But what, if anything, is the real and immediate impact on your life? On your travel plans, finances, education, consumer rights and even your phone usage on holiday?

The reality is that the UK will remain in the EU’s single market as negotiations proceed regarding the future trading relationship. During this transitional period, which is expected to last until 31 December, EU law will remain in force.

Note that this does not mean that everything can still be turned upside down at the end of December this year.

It is important to know that when commentators talk about a “no deal” still being on the table at the end of December, this is not the dramatic cliff edge that people referred to last year.

The withdrawal agreement, or Brexit deal, that Boris Johnson reached with the EU last October enshrines in law all the rights and legislation pertaining to the three areas of negotiation in the first phase of Brexit talks. These were: the Irish border; EU citizens rights; and the divorce bill.

Even if trade talks break down this year, and the EU and the UK cannot agree on the remaining issues, this will not impact on these three areas.

It is also worth noting that the reason the withdrawal agreement has been such a battleground is because it will be, in a matter of days, a legally binding international treaty that the UK and the EU must abide by under international law.

It means that the rights of EU citizens in the UK and British citizens settled in the EU are protected for life, beyond the 31 December negotiation deadline.

All that remains is for the European parliament to ratify it formally by 29 January for it to be an international treaty.

British pensioners in countries such as Spain will continue to have their pensions uprated. Photograph: Andrew Lever/Alamy

I retired to Spain. Will my state pension still go up every year?

Pensioners who have already retired to an EU country – with Spain the most popular – can heave a huge sigh of relief. They had been concerned that under a no-deal Brexit their pension could be “frozen” at the date of leaving the EU, with no further increases.

Former pensions minister Ros Altmann says: “Current UK pensioners in Europe are guaranteed lifelong state pension uprating: the withdrawal agreement has negotiated reciprocal rights for state pensions to increase in line with those paid in the UK. People’s fears of having their pensions frozen can now be allayed. The government should now reassure these pensioners that, whatever happens after 2020, they have lifelong state pension uprating.”

However, the withdrawal agreement does not cover those who retire to Europe after 2020. The government says it is aiming to agree reciprocal arrangements with the EU for the next phase of the UK’s departure. But if it fails to do so by year end, says Altmann, and the implementation period is not extended, future UK pensioners in Europe could have their state pensions frozen.

Altmann says there is an “urgent need” for the government for the government to better inform existing pensioners. “I am delighted that there is now protection for the 650,000 or so worried British citizens living in European countries. I also hope that the next phase of Brexit will agree reciprocity by end 2020.”

Arriving in the EU: which passport queue will you have to join?

Nearly all EU airports operate two channels for arrivals – telling passengers to go through either the EU channel or the (usually much slower) non-EU queue. Officially from 1 February the British are no longer in the EU, but fortunately they will be told to continue to go through the EU queue. What happens after 31 December is much less clear: the Republic of Ireland said there would be a combined EU/UK channel, but other governments are still deciding.

At Dublin airport, for example – where UK passport holders make up around a third of arrivals – the authorities said: “UK passport holders will continue to be processed by Irish immigration through the EU channel post 31 January. After the end of the transition period at the end of the year, given the common travel area, the signage will be amended and UK passport holders will then go through a combined EU/UK channel rather than a non-EU channel.”

The common travel area is a free movement convention between the UK and Ireland that predates the UK joining the EU.

We asked other EU governments what their approach will be. In a statement, the Dutch ministry of defence said: “During the transition period, expected to start 1 February, the procedure for border checks will remain unchanged. This means that UK travellers can still use the e-gates and/or join the EU+EEA [European Economic Area] channel. After the transition period ends, UK travellers will be subject to more thorough checks as third-country nationals.”

The Spanish government said everything would remain the same for British travellers this summer – and UK tourists could continue to use e-gates as before.

UK holidaymakers will not be able to pay the reduced duty price on alcohol and cigarettes that travellers from the US and Asia enjoy. Photograph: Anouchka/Getty Images

Will you now be allowed to buy cheap booze in the duty-free shop?

No. During the transition period, which runs until at least 31 December, the rules on what goods you can bring into the UK from the EU remain the same. So on the one hand, you can still take the car to Calais on a booze cruise and return loaded with cheap wine. But on the other, you cannot go into duty-free zone at airports and pay the reduced duty price on alcohol and cigarettes that travellers to, say, North America or Asia currently benefit from.

Will I be able to rely on a European health insurance card this summer?

Yes. The EHIC, which gives you state-provided healthcare in the EU for free or at reduced cost until you return home, will continue to work as before until the end of December this year. The UK has issued about 27 million of the cards, and you can still apply for a free one – type “NHS EHIC” into Google and don’t fall for any of the dodgy websites that charge fees.

What happens after December? It could continue to work as now, but will depend on what is decided in the negotiations. Note that the EHIC is not the same as a travel insurance policy, and you should still buy holiday cover for your summer break.

Will I need a new blue UK passport?

No. There will be no change to the British passport, though the UK government has started replacing the EU burgundy covers with blue ones.

Will mobile phone firms still offer free roaming after 31 December?

Arguably the one thing even the most rabid Brexiters will miss, is how the EU’s roaming rules have allowed mobile users to use their handsets “as if at home” while travelling in another EU country. Britons heading abroad this year will still be able to use their UK calls and data allowance while on holiday.

Calls back to the UK, to landline numbers and to other UK mobiles, will still have to be charged as if at home until 31 December. From 1 January 2021, there is nothing legally to stop roaming charges being reintroduced for UK travellers. The mobile operators have indicated they are working to keep the existing regime, but this is not guaranteed.

So far, only the Three network has committed to not reintroducing roaming to EU destinations. EE, the UK’s biggest network, told Money this week that had “no plans to change [current free roaming] based on the Brexit outcome”. O2 said it would be “working closely with the government and other European operators to try to protect the current arrangements”. Vodafone’s stance is almost identical.

If no government-level agreement is reached, it will then be up to the providers to negotiate agreements with each of the networks across the EU.

UK students starting courses this autumn may have to pay higher fees. Photograph: Chris Ison/PA

What happens if I apply for a course in the EU starting in September?

One of the big unknowns has been what will happen to students who start a three- to four-year degree course this coming September. Before Brexit, EU residents could study in any other European country and pay the same fees as if they originated in that country. There are 143,000 EU students studying here, and a smaller but significant number of UK undergraduates studying in EU countries – where they pay considerably lower fees than in Britain.

Most students studying in another EU country who have already started a course have been told they will continue to pay the same “home” fees as they paid in the first year. The British government has also pledged that EU students arriving in the UK to start a course this September will pay the home fees rate – up to £9,250 a year – for the course’s duration.

This compares with the £30,000-plus fees paid by international students, that they might otherwise have been forced to pay. Crucially, because EU nationals are treated as “home” applicants, they also gain access to the local student finance scheme.

It has been less clear as to what will happen to British students starting courses in an EU country this coming autumn – many of whom will be applying right now. In the Netherlands, a big draw for UK students, those already on courses could be given the same home fee promise.

A spokesman for the Dutch government told Money that UK students starting courses this September would pay the home fees – currently €2,043 (£1,722) a year – for the course’s duration provided they remain living and registered in the Netherlands.

Without this pledge, British nationals would have to pay international student fees of between €8,000-€15,000 a year. Students arriving after 31 December, will be treated as international students and pay the higher fees, the Dutch government confirmed.

Britons can still drive in the EU on a UK driving licence the rest of 2020. Photograph: Arthur Tilley/Getty Images

Will my UK driving licence be acceptable in the EU?

Had the UK crashed out of the EU without a deal, Britons taking their car to most European countries this year would have required an international drivers permit – in some cases two – and to travel with a green card proving their car was insured. The fact that we are now in “transition” means drivers need only produce their UK licence, and their existing UK insurance documents, if asked.

Drivers still need to take their V5 ownership document, and a GB sticker is still required. After 31 December – and the end of the transition period – drivers permits and green cards will be required, unless an agreement is struck by the government and the EU. A mutual agreement recognising driving licences/insurance between the EU and UK is likely, but by no means guaranteed. Watch this space.