It was the worst of times; it was the worst of times. As a result of the Home Office gridlock caused by the coronavirus pandemic, EU citizens seeking to apply for post-Brexit immigration status under the EU Settlement Scheme have been disadvantaged in various ways, including longer processing times. The application deadline looms, but the government has ruled out an extension. 

In a further blow, those already granted pre-settled status who are facing financial difficulties because of the pandemic are finding that their entitlement to claim benefits is more complicated than they might have expected. In this article, we’ll explain the law on claiming benefits and then discuss how it applies to people with pre-settled status trying to claim Universal Credit in particular.

Overview: habitual residence and right to reside

Since 1994, eligibility to claim public funds in the UK has been determined in part by the “habitual residence” test. The habitual residence test can be complex and is based on factors such as length of residence in the UK and intention to reside here in future.

Failure to meet the test meant that you are treated as not being “in Great Britain” — or in some benefits regulations as being “a person from abroad” — and so ineligible to claim benefits. It applies to anyone from abroad, including British citizens returning to the UK, unless they fall into an exempt group (see below).

The Social Security (Habitual Residence) Amendment Regulations 2004 require people — including EU citizens — who want to claim certain benefits to pass an additional “right to reside” test. In effect, this creates a two-step process: if you pass the right to reside test, you will then be assessed for habitual residence. Someone who does not have a right to reside automatically fails the habitual residence test, unless they are exempt from the test entirely.

Which benefits are affected?

The full two-part test applies to means-tested non-contributory benefits, where eligibility does not depend on National Insurance contributions. These include income-based Jobseeker’s Allowance, income-related Employment and Support Allowance, Housing Benefit and Universal Credit.

Other benefits are subject to the habitual residence test without having to prove a qualifying right to reside: Disability Living Allowance, Personal Independence Payment, Carer’s Allowance and Attendance Allowance. 

In the case of contributory benefits, where eligibility is based primarily on National Insurance contributions and which are not means-tested, EU citizens again need only meet the habitual residence test and not the right to reside test. These benefits include contribution-based Jobseeker’s Allowance and contribution-based Employment and Support Allowance.

In the rest of this article we’ll focus on Universal Credit, which is being rolled out as one of the main welfare payments, including to people who are unemployed.

Who is exempt from the habitual residence test?

An EU citizen who is a “qualified person” as a worker or a self-employed person under the Immigration (European Economic Area) Regulations 2016 is exempt from the habitual residence test entirely. That also means they don’t have to pass the right to reside test. The same exemption also applies to their direct family members, such as children and spouses.

In practice, EU citizens who are exempt from the habitual residence test because they are a worker or self-employed still need to demonstrate their status, by providing evidence such as payslips, P60s and employment contracts in the case of workers, and business bank statements, proof of HMRC registration, tax records, receipts and invoices if they are self-employed.

The Universal Credit Regulations 2013 also exempt anyone who has acquired permanent residence under EU law as a worker or self-employed person who has ceased activity (regulation 15(1)(c) of the EEA Regulations), a family member of such a person (regulation 15(1)(d)) and anyone who acquires permanent residence following the death of such a person (regulation 15(1)(e)). In these cases, applicants should provide evidence of their permanent residence, as well as evidence of the basis on which it was acquired.

Other exempt groups include refugees and anyone granted Discretionary Leave or Humanitarian Protection, although that is beyond the scope of this article.

For everyone else, the first step in establishing eligibility for Universal Credit is proving their right to reside.

What counts as a right to reside?

EU citizens granted settled status under the EU Settlement Scheme have been granted indefinite leave to remain under the Immigration Rules. That meets the right to reside test. Provided the person is habitually resident in the UK, they are eligible to claim Universal Credit. (At least from an immigration point of view — there are other eligibility rules, such as not having enough savings to fall back on.) The same applies to EU citizens with permanent residence acquired under the EEA Regulations (other than on the grounds mentioned above, which exempt them from the habitual residence test entirely) for the duration of the transition period. 

But we’re here to talk about people with pre-settled status. Pre-settled status does not meet the right to reside test. This is because of the Social Security (Income-related Benefits) (Updating and Amending) (EU Exit) Regulations 2019. As the explanatory notes for the regulations state (my emphasis):

These Regulations amend the income-related benefit regulations [including the Universal Credit Regulations 2013] to reflect that a new right to reside has been created for nationals of European Economic Area states (“EEA nationals”) in Appendix EU to the immigration rules made under section 3(2) of the Immigration Act 1971 (c. 77), in the form of limited leave to enter, or remain in, the United Kingdom. The effect of these Regulations is that this new right to reside [ie pre-settled status] is not a relevant right to reside for the purposes of establishing habitual residence.

In other words, while pre-settled status is obviously a right to reside in ordinary language — it allows you to live in the UK — it does not satisfy the “right to reside test” in benefits-speak.

That doesn’t mean that it is impossible for people in this position to satisfy the right to reside test. It just means that flashing pre-settled status won’t cut it. There are other ways that people with pre-settled status can meet the test.

How can EU citizens with pre-settled status meet the right to reside test?

EU citizens not exempted from the habitual residence test thus cannot rely on pre-settled status alone to meet the right to reside test and must show that they have an alternative right to reside under the EEA Regulations 2016. Regulation 9 of the Universal Credit Regulations 2013 says that there are a number of residence statuses that do not count, including:

• Initial right of residence for three months (see regulation 13 of the EEA Regulations)
• Jobseeker (regulation 6(1) of the EEA Regulations)
• Family member of a jobseeker (regulation 7 of the EEA Regulations)
• Zambrano carer (regulation 16(5) of the EEA Regulations)

So what does that leave? Putting aside these exclusions, and anyone who is exempted from the habitual residence test altogether, there are several types of status which demonstrate a right to reside:

• Student (regulation 4(d) of the EEA Regulations)
• Self-sufficient person (regulation 4(c))
• Worker or self-employed person who has ceased activity (regulation 5)
• Family member of the above

In each of these cases, evidence should be provided of how the applicant has a right to reside. In cases where the right to reside stems from a family member, evidence should be provided of how they meet the right to reside test, as well as how the applicant is related to them. The Citizens’ Advice website provides helpful resources on the right to reside test and how it can be met by EU citizens on pre-settled status.

How can EU citizens with a right to reside meet the habitual residence test?

The next step after demonstrating a qualifying right of residence is to show that the wider habitual residence test is met. As noted above, however, this does not apply to anyone exempted from the test entirely, including workers and self-employed people.

The classic test for habitual residence, which for these purposes is synonymous with “ordinary residence”, comes from the House of Lords case of R (Shah) v London Borough of Barnet [1982] UKHL 14:

“ordinarily resident” refers to a man’s abode in a particular place or country which he has adopted voluntarily and for settled purposes as part of the regular order of his life for the time being, whether of short or long duration.

There is, of course, one important exception. If a man’s presence in a particular place or country is unlawful, e.g. in breach of the immigration laws, he cannot rely on his unlawful residence as constituting ordinary residence […] And there must be a degree of settled purpose.

Meeting the habitual residence test is reasonably straightforward for applicants who have lived in the UK over the last five years, where the centre of their life is in the UK. More recent arrivals, and anyone who splits their time between different countries, may need to provide more extensive evidence of their circumstances. The type of evidence that can be submitted includes:

• Evidence of when they arrived in the UK (e.g. passport, travel tickets, tenancy agreement)
• Evidence that the UK is their main home (e.g. tenancy agreement or mortgage statement, payslips, letter from GP or medical records, HMRC records, evidence of membership of local clubs or societies, bank statements)
• Evidence that their future lies in the UK (e.g. evidence of a job offer, evidence that their children have been enrolled in school)

Legal challenge to pre-settled status not being a right to reside

In the recent case of Fratila and Tanase v SSWP [2020] EWHC 998 (Admin), the High Court rejected the argument that excluding pre-settled status from being a qualifying right to reside is discriminatory on the ground of nationality. The Child Poverty Action Group, representing the claimants, said that it will appeal the decision.

Whatever the outcome of the appeal, the government has a moral obligation to ensure that members of the public, including EU citizens, who are facing destitution as a result of the pandemic, are able to meet their basic needs. In such exceptional circumstances, it would be appropriate and just to extend access to public funds to prevent the most vulnerable from falling through the cracks — even in the absence of a legal obligation to do so.