No-deal Brexit – what it could mean for your finances and travel

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It’s less than two months before we’re due to leave the EU and it looks increasingly likely that we could leave without a deal. If that’s the case, find out what it could mean for your finances and travel.

No deal Brexit and banks

If you bank with or have savings with a UK branch of an EEA (European Economic Area) based bank, your savings will now be protected by the UK-based Financial Services Compensation Scheme (FSCS). This means that your savings, up to a limit of £85,000 per bank are covered by the FSCS if the bank were to go bust.

SAVVY TIP: The reason why savings compensation is an EU/Brexit issue is that it’s EU rules that increased the savings compensation limit to £85,000. Across the EU, people who have savings with banks are protected up to a limit of €100,000. At the time, the equivalent in pounds Sterling was £85,000.

Before the Brexit referendum, most of the banks that had their headquarters within the European Economic Area, but which operated in the UK, chose to be covered by the FSCS anyway. However, a handful didn’t. Since earlier this year, all EEA headquartered banks that hadn’t signed up to the Financial Services Compensation have had to set up new legal structures, so they could sign up to the FSCS.

Paying EU-based companies

If you want to buy something from a company that’s based in the EEA, you’ll still be able to pay for it using your credit or debit card if there’s a no-deal Brexit. However, if we leave the EU without a deal, it could become more expensive. That’s because EU rules banned shops and companies from applying a surcharge if you pay for something using your credit or debit card. However, if we leave the EU without a deal, EEA-based shops will be free to impose a surcharge.

The government says that shops in the UK won’t be able to apply a surcharge if you’re paying with a credit or debit card that’s been issued by a UK bank. However, if – for example – you’ve moved here from another EU country and have a bank account with a bank based in your home country, you may be charged a surcharge.

Sending Euros

If you want to send Euros or pay for things electronically in Euros, this could become more expensive and take longer. The same applies if you want to receive Euro payments.

No-deal Brexit and travel

If we leave the EU without a deal, you won’t need a visa to travel to the EU. The exception is if you plan to stay for more than 90 days in a six month period. Flights to the European Union, and flights that stop off there, will still continue after a no-deal Brexit. However, there could be delays at airports, especially in the weeks immediately after October 31st. In the summer, the consumer organisation Which? warned that airports in Spain would be likely to see the longest delays. That’s because they get the highest percentage of UK travellers.

After a no-deal Brexit, people from the UK will be treated the same as those from so-called ‘third party’ countries, such as the United States and Canada. That means if you travel in the EU, you must:

  • Have a passport that’s been issued within the last ten years on the date you arrive, and
  • Have at least three months left on your passport from the planned departure date from the EU country. However, the rules say that you can stay in an EU country governed by the Shengen border code for 90 days. So the UK government is advising that you make sure your passport is no older than nine years and six months on the day you travel. For children under 16 with a five-year passport, you should make sure it has at least six months left on it.

SAVVY TIP: Up until now, you’ve been able to carry over any unexpired time from your old passport to your new one, subject to a nine month limit. This meant your new passport could be valid for up to 10 years and nine months. However, since the start of September, this hasn’t been possible. Even if your old passport has some time left, your new passport will only last for 10 years.

No-deal Brexit and your EHIC

If there’s a no-deal Brexit, your EHIC will not be valid across the EU from November 1st, without a new agreement in place. Your EHIC gives you the right to access medical treatment on the same basis as someone who lives in that country.

The UK wants agreements in place so that the EHIC remains valid until December 2020. However, as I write this, there are no such agreements. Unless and until that happens, if you don’t want to have to pay for medical treatment, you’ll need to get travel insurance.

WARNING: If you have an existing illness or medical condition, you could find it difficult or expensive to get travel insurance. You’re probably much better off going to a travel insurer who specialises in policies for people with medical conditions. I’ve written about companies that specialise in travel insurance for people who have cancer in my article Travel insurance if you have cancer

Driving in the EU

At the moment, your UK driving licence is valid in the EU if you drive there on holiday or for work. If you move to an EU country, you can exchange your UK driving licence for an EU one without having to resit your driving test.

After October 31st, if we leave the EU without a deal, that will change:

  • Your UK driving licence will not be enough on its own to drive in the EU
  • You won’t be able to exchange your UK driving licence for another EU country’s one if you go to live there.

If you want to drive in the EU after October 31st or hire a car, you’ll need at least one, and possibly two types of international driving permit. These currently cost £5.50 each. The type of permit you need will depend on the country/ies you’ll be driving in. The two types of driving permit are governed by different conventions:

  • International driving permit governed by the 1949 Geneva Convention on Road Traffic: lasts for 12 months and would be needed for Ireland, Malta, Spain and Cyprus.
  • International driving permit governed by the 1968 Vienna Convention on Road Traffic: lasts for three years (or until your driving licence expires, if that’s earlier). It would be needed in all the other EU countries, plus Norway and Switzerland.

You can currently get both international driving permits from your Post Office.

Car insurance in the EU

At the moment, part of our membership of the EU means that, if you drive in the EU in your car, your insurer has to offer the minimum level of insurance that’s legally required. That means you get third party cover automatically. So, if you cause an accident or damage someone else’s car or property, your insurer will pay out. Some car insurers provide fully comprehensive insurance for a limited time if you take your car to the EU. Most will add it on for an extra fee.

The good news is that your car insurer will still have to provide third party insurance cover if you take your car to an EU country if we leave the EU without a Brexit deal on October 31st 2019. What will change is that you will have to carry a Green Card to show that you have the correct insurance. You should ask for a Green Card from your car insurer. Green Cards are free, but insurers can charge an admin fee for issuing them.

If you don’t have a Green Card, you may be fined and will have to buy what’s called ‘frontier insurance’, which can be expensive.

SAVVY TIP: A Green Card is a green-coloured document that your car insurer issues to show that you’re insured to drive in a range of countries. You currently need it if you drive your car outside the EU.

If you drive in the EU (or Switzerland, Serbia or Andorra), you don’t need to show what’s called a Green Card.

SAVVY TIP: If your car insurance is due to expire during your holiday, you should check with your insurer as to whether you need one or two Green Cards. If you’re switching to a different insurer when you renew, you will need a Green Card from each insurer.

Travel and your pet

If you normally take your pet on holiday, be aware that you may need to contact your vet up to four months before you go on holiday, to arrange blood tests. Exactly what you’ll have to do will depend on the status that the UK has after a no-deal Brexit.

House prices after Brexit

House prices are predicted to fall if we leave without a deal on October 31st. Predicting house prices is far from an exact science! Experts get it wrong all the time. However, the Office for Budget Responsibility, which was set up by the government, predicts that house prices could fall by ten per cent after a no-deal Brexit. The latest house price report from Nationwide showed prices didn’t rise in August, although it’s unwise to draw a long-term trend from one month’s statistics.

While house price rises are very difficult to predict, uncertainty normally results in lower prices and fewer buyers and sellers. House price falls are good news for first time buyers, less important if you’re selling your home and buying a new one, but it’s not good news if you’re selling up and renting.

SAVVY TIP: If you’re selling, price your home realistically.  These days, with so many online house price portals, it’s so easy to see how long a property has been on sale for and how its price has been reduced. If you’re buying, sellers should be more open to a lower offer, because – frankly – who knows what the housing market will be like after October 31st?

Related articles: 

Your state pension if you move abroad; will it be frozen and how to claim

10 things you need to know about making a savings claim to the Financial Services Compensation Scheme.

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