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BREXIT

BREXIT: Premium Bond holders in Spain may have to cash in if no UK bank account

British residents of Spain have flagged up the latest Brexit consequence that could affect not just them, but also UK nationals living in other EU countries. Holders of Premium Bonds have been warned they may have to cash in their investments if they can no longer hold a bank account in their home country. 

premium bonds brexit spain
Lloyds Bank, Barclays and Coutts are among the lenders who have been closing accounts of their UK customers resident in the EU.(Photo by ADRIAN DENNIS / AFP)

The news has been shared on Facebook groups by people affected, after they were sent a letter from the state-owned UK savings bank NS&I (National Savings & Investments) warning them that a UK bank or building society account is an essential requirement for holders of their products. 

Premium Bonds are a type of lottery run by NS&I. Britons or UK residents can invest an amount ranging from £25 to £50,000 (€29 to €58,300+) in the bonds, with a number assigned to each pound invested.

Winning numbers are drawn each month awarding tax-free prizes. The amount invested is completely safe. As much as £1 million is on offer in the monthly draws, with the lowest prize coming in at £25.

NS&I also offers a range of other investment products, such as Income Bonds – which pay regular interest to holders – and Direct ISAs, which are a tax-free savings account. 

According to NS&I, which was responding to questions from The Local, all of their products are affected by this change.

The reason for the warning to customers is the fact that some UK banks have been closing the accounts of their customers based in the EU, given that these lenders no longer have the licence necessary to maintain them after Brexit. 

Judy Filmer has lived on the Costa del Sol for 21 years, and is among the NS&I customers to receive the letter, as did her 95-year old mother, who is also a resident of Spain.

“For many older folks this will be another upheaval to negotiate in the storm left by Brexit,” she told The Local.

“NS&I and Premium Bonds are cosy ways of saving, and pensioners find them easy to use.”

Lloyds Bank, Barclays and Coutts are among the lenders who have been closing accounts of their UK customers resident in the EU.

Other banks, however, including HSBC, Santander and NatWest, are currently taking no such action for clients that fall into this category. 

The letter sent earlier this year by NS&I stated that “some banks and building societies in the UK have told their customers living in certain EU countries that they will no longer be permitted to hold their UK-based accounts” since the Brexit transition.

“As you live in one of those countries,” the missive continues, “we realise that this could affect your ability to continue holding your NS&I Premium Bonds and Income Bonds account(s). This is because you need to have a UK bank or building society account to continue to operate an account with NS&I.”

The communication from NS&I goes on to warn holders of its products that they will have to provide details of another UK account held, or if “you don’t have access to another UK account in your name, you will need to close your NS&I account.” 

Speaking to The Local, NS&I clarified that “it would be impractical and against NS&I’s Customer Agreement (terms and conditions) for [these customers] to continue holding NS&I products. NS&I’s Customer Agreement requires customers to keep a UK bank or building society account open in order to operate its accounts.”

However, all is not lost. NS&I confirmed to The Local that “any UK bank or building society account that can receive BACS payments” will be accepted for holders of its products living in the EU. 

premium bonds

HSBC, Santander, NatWest and other banks are currently taking no action against clients abroad regarding Premium Bonds. (Photo by ADRIAN DENNIS / AFP)

London-based financial technology company Wise (formerly TransferWise) does offer such an account.

“British nationals living in the EU can open a Wise Account to get their own personal UK account details, which supports payments made by BACS transfer,” the firm told The Local. “This means UK citizens living in the EU can get a personal UK account number with the Wise Account.”

In practice this means that anyone who holds NS&I products, and is facing having their UK account closed by their lender due to Brexit, can open a substitute account with Wise or a similar firm that supports BACS payments and accepts UK nationals resident in the EU as customers. 

Providing, of course, no more ‘Brexit benefits’ arrive…

Tax on Premium Bonds

While winnings from Premium Bonds are tax free in the United Kingdom, it’s a different story if you are living in Spain.

The Local spoke to Spain-based financial adviser Chris Burke, who explained that the rules of each individual country determine whether tax is due on prizes from the product.

“In Spain, each year you must declare any monies received from these whether you access this or not, and pay the tax liable,” he explained.

“This would be savings/capital gains tax starting from 19 percent [for amounts up to €6,000] and rising up to 26 percent [for anything over €200,001].”

So be warned: while you might take home a tidy million pounds in the UK if your Premium Bonds number comes up, in Spain you’ll have to share it out with the Tax Agency.

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BREXIT

What is the latest on Gibraltar’s Brexit status?

With 2023 approaching and negotiations between Gibraltar, the UK, EU and Spain dragging on for yet another year, what is the latest on Gibraltar and Brexit? Will they reach a deal before New Year and how could it affect life in Gibraltar and Spain?

What is the latest on Gibraltar's Brexit status?

As British politics tries to move on from Brexit, the tiny British territory at the southern tip of Spain, Gibraltar, has been stuck in political limbo since the referendum all the way back in 2016.

Gibraltar, which voted in favour of Remain during the referendum by a whopping 96 percent, was not included in the Brexit deal and has instead relied on a framework agreement made between the UK and Spain on New Year’s Eve in 2020.

After that framework was laid out, it was hoped that the various parties – that is, the Gibraltarian government, Spain, the EU, and the UK – would build on it and quickly find a wider treaty agreement establishing Gibraltar’s place on the European mainland in the post-Brexit world.

It was thought that Gibraltar could enter into a common travel area with the Schengen zone, limiting border controls and essentially creating a custom-made customs arrangement with the EU.

But since then, the negotiation process has stopped and started, with no deal being made and uncertainty dragging on through 2021.

Despite all parties still being relatively optimistic in the spring of 2022, no resolution has been found and 2023 is approaching.

Relying on the framework agreement alone, uncertainty about what exactly the rules are and how they should be implemented have caused confusion and long delays on the border.

The roadblocks

Progress in the multi-faceted negotiations to bash out a treaty and determine Gibraltar’s place in the post-Brexit world have repeatedly stumbled over the same roadblocks.

The main one is the issue of the border. Known in Spain and Gibraltar as La Línea – meaning ‘the line’ in reference to the Spanish town directly across the border, La Línea de la Concepción – the subject of the border and who exactly will patrol it (and on which side) has been a constant sticking point in negotiations.

Madrid and Brussels have approached the British government with a proposal for removing the border fence between Spain and Gibraltar in order to ease freedom of movement, Spain’s Foreign Minister José Manuel Albares said in late November 2022. There has been no immediate response from London.

The Gibraltarians refuse to accept Spanish boots on the ground and would prefer the European-wide Frontex border force. The British government feel this would be an impingement on British sovereignty. There’s also been the persistent issues of VAT and corporation tax considerations, as well as the British Navy base and how to police the waters around it.

Though there had been reports that the ongoing British driving license in Spain fiasco had been one of the reasons negotiations had stalled, the British ambassador to Spain Hugh Elliot categorically denied any connection between the issue of Gibraltar’s Brexit deal and British driving licence recognition earlier in November.

READ ALSO: CONFIRMED: Deal on UK licences in Spain agreed but still no exchange date

On different pages?

Not only do the long-standing sticking points remain, but it also seems that the various negotiating parties are on slightly different pages with regards to how exactly each seems to think the negotiations are going.

Judging by reports in the Spanish press in recent weeks, it appears that many in Spain may believe the negotiations are wrapping up and a conclusion could be found by New Year. This perception comes largely from comments made by Pascual Navarro, Spain’s State Secretary to the EU. Speaking to reporters in Brussels, Navarro claimed that negotiations have advanced so well that they were now only working ‘on the commas’ of the text – that is to say, tidying it up.

According to Gibraltar’s Chief Minister Fabian Picardo, though negotiations are ongoing, “we’re not there yet”. (Photo: JORGE GUERRERO/AFP)

“No issue that is blocked,” he said. “All of the text is on the table.” A full treaty, he suggested, could be signed “before the end of the year.”

Yet it seems the Gibraltarians don’t quite see the progress as positively as their neighbours. Last week the Gibraltar government, known as No.6, acknowledged Navarro’s optimism.

According to Gibraltar’s Chief Minister Fabian Picardo however, though negotiations are ongoing, “we’re not there yet”.

No.6 remains positive and hopes for a deal, but in recent weeks has also published technical contingency plans for businesses to prepare for what they are calling a ‘Non-Negotiated Outcome’ – effectively a ‘no-deal’ in normal Brexit jargon.

The UK, however, seem to be somewhere in the middle. Like Navarro, the British Foreign Secretary James Cleverly recently suggested at a House of Commons select committee that only “a relatively small number” of issues remain to be resolved.

However, he also acknowledged the possibility of a non-negotiated outcome. “I think it’s legitimate to look at that [planning for a non-negotiated outcome] as part of our thinking,” Mr Cleverly said. “But obviously we are trying to avoid an NNO.”

Election year

If no deal is found by New Year, that would mean that negotiations drag into 2023 – election years for both Picardo and Pedro Sánchez, Spain’s Prime Minister.

Gibraltar is expected to have elections sometime in the second-half of the year, and Sánchez has to call an election by the end of 2023.

In many ways, Spanish domestic politics has the potential to play a far greater role in Gibraltar’s fate than British politics. In fact, the shadow of Spanish politics looms over these negotiations and the future relationship between Spain and Gibraltar, the UK and Spain, and the UK and EU.

If Sánchez’s PSOE were to lose the election, which according to the latest polling data is the most probable outcome, then it would be likely that Spain’s centre-right party PP would seek to renegotiate, if not outright reject, any deal made.

READ ALSO: Who will win Spain’s 2023 election – Sánchez or Feijóo?

If PP are unable to secure a ruling majority, however, they may well be forced to rely on the far-right party Vox, who have often used nationalist anti-Gibraltar rhetoric as a political weapon. If Vox were to enter into government, which is unlikely but a possibility, it’s safe to say any agreement – if one is even reached before then – would be torn up and the Spanish government would take a much harder line in negotiations.

As the consequences of Brexit churn on in Britain, in Gibraltar uncertainty looms.

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