The EU and the UK have now agreed on a further "Brextension". The European Council decision of 11 April 2019 further extends the negotiating period to 31 October 2019 (but we could leave earlier). A no-deal Brexit remains a possibility.

What does this mean for EEA and Swiss citizens in the UK?

In the event of a no-deal Brexit, the Government has confirmed that the EU settlement scheme would apply to EEA and Swiss citizens and their families living in the UK by exit day. They would have until 31 December 2020 to apply for settled status under the EU settlement scheme.

If there is no Brexit deal, the rules on settled status would not apply to EEA and Swiss nationals and their family members wanting to come to the UK after exit day. Instead they would have to apply for and obtain European Temporary Leave to Remain (ETLR) in order to be able to stay in the UK (the ETLR is valid for three years). To stay for longer than three years a further application would be required under the immigration rules applying from 1 January 2021.

EEA and Swiss citizens and family members arriving in the UK after 31 December 2020 will be subject to the UK's skills-based immigration system coming into force on 1 January 2021. For more information, read our recent update on "Settled status: what do employers need to know?"

Why is that important for personal taxation matters?

Personal taxation in the UK is linked to where a person lives and works. The EU Settlement Scheme offers EEA and Swiss citizens and their families the possibility to stay in the UK after Brexit and moving to the UK at a later date is expected to be facilitated as well. However, Brexit will still affect individuals' decisions to move permanently. These decisions will affect a person's domicile status and, consequently, their personal taxation position. If you become UK domiciled then your worldwide income, worldwide gains and your worldwide estate on death would be subject to the UK tax net. You should also consider what implications there may be in your country of origin and the taxes applied there if you become UK domiciled.

There are currently reliefs from inheritance tax designed to ensure compatibility with EU rules on free movement. For example, relief from inheritance tax on the value of agricultural property currently extends beyond property situated in the UK (plus the Channel Islands and the Isle of Man) to include property situated anywhere in the EEA. Such reliefs may be removed post-Brexit as no longer required.

Brexit is already affecting people's lives, including their personal taxation position, and many questions remain unanswered. As matters develop, considered advice will be required.

Visit our Brexit Hub for regular updates on Brexit - personal tax and succession and Brexit - personal tax and succession - European holiday home.


Leigh Gould