Contracting Life

EU settled status for contractors and freelancers: why it still matters

When the UK first began proceedings to leave the European Union, EU settled status was talked about a lot in…

Author Photo by Kingsbridge

When the UK first began proceedings to leave the European Union, EU settled status was talked about a lot in the news and on social media. It’s less of a ‘hot topic’ now, but it is still vital for EU contractors living in the UK to ensure that they are able to continue residing here and carrying out their business.

Having settled or pre-settled status protects your rights in the UK and without it you would be unable to work. In this blog, we cover exactly what settled and pre-settled status means, how you prove your continuous residence, and how you can still apply.

The original deadline for applications for this was 30th June 2021. However, if you meet one of the criteria for a later deadline, or you have ‘reasonable grounds’ for not applying by the original deadline, you can still apply. Additionally, if you have what’s known as pre-settled status, you can apply now for full settled status.

What is EU settled status and pre-settled status?

Under Brexit, EU citizens were able to stay in the UK under free movement rights until 31st December 2020. After this point, those wishing to continue living in the UK needed to apply for settled status. You would be eligible for settled status if you had at least five years of continuous residence in the UK, meaning you have not been outside the UK for more than six months in any 12-month period. If you had less than five years of continuous residence, then you would be eligible for pre-settled status.

Both statuses protect your rights to live and work in the UK. The only difference is that pre-settled status only lasts for five years and you must apply for settled status once you have continuously lived in the UK for five years, but before your pre-settled status expires.

For example, if you came to the UK on 14th November 2017 and were granted pre-settled status on 30th January 2020, you will be able to apply for settled status from 14th November 2022 when you have lived in the UK for five years. However, the last day you would be able to make this application is 13th November 2025, just before your pre-settled status expires.

How do you prove ‘continuous residence’?

When applying for settled or pre-settled status, you will need to prove that you have been living in the UK continuously for five years. You can do this by demonstrating that you have been economically active. The idea of being economically active is an easy one to prove for those in regular employment; you’ll have employment contracts, employer statements and years of PAYE contributions to support your claim. But how do contractors and freelancers go about proving their status?

The first thing the government will ask for is your National Insurance number. Using this, they will see if they can gather enough financial data (taxes, National Insurance contributions, benefit claims) to prove five years of residence.

However, it’s worth having a separate record as you will be asked for this evidence should they not gather enough data from your National Insurance number. The first step is to keep a record of both your economic activity and your movements in and out of the UK. This will help you build up a picture of your residency and your work. This particularly applies if you work abroad a lot.

Paying taxes isn’t a definitive necessity of proving economic activity, but, as you can imagine, it is seen as a pretty strong indicator. This applies even if you are a freelancer earning below the tax threshold – simply returning the form annually provides an official record of your economic activity.

We know that income and work can be irregular for self-employed persons, and so your five years of economic activity don’t have to be consecutive. You can build up periods of activity that amount to five years, and cut out inactive periods when applying. As ‘continuous residence’ allows for six-out-of-12 months to be spent outside the UK, some gaps are allowable. Claiming tax relief or other in-work benefits shouldn’t affect your claim, and periods where you were studying in the UK also count.

For contractors and freelancers who may have taken time out of work as maternity leave, up to 12 months leave during pregnancy and after childbirth can count towards their five years. Other important reasons for being out of work, such as serious illness, study, vocation training or an overseas work posting are also acceptable for making up the five years – as long as this is only once and does not exceed 12 months. Compulsory military service of any length is also allowable.

What do I do now the EU settled status deadline has passed?

There are some circumstances where you can still apply for EU settled or pre-settled status. For instance, children who were born or adopted on or after 1st April 2021, or family members who have joined relatives in the UK on or after 1st April 2021.

Full details on who is still eligible to apply can be found on GOV.UK. And, of course, remember that if you have pre-settled status you may now be eligible to apply to change to settled status.

Remember that proof of economic activity we talked about? Well, having the right cover in place for your contractor business is an excellent idea too, as it helps to demonstrate you have an active business.

Kingsbridge have the ideal business insurance package to give you a suite of insurance products for your limited company. It won’t take you five years though – just five minutes on the phone to one of our friendly advisors and they’ll show you why Kingsbridge’s simple, compliant, comprehensive package is the right choice for you. Contact us today.

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