European rules will continue to apply to the UK until the end of 2020, the government has announced.
A white paper, published today by the Department for Exiting the European Union, revealed EU law will continue to apply to the UK until the end of the agreed transition period.
In March the UK and the EU reached an agreement for a 21-month transition period in order to negotiate a final free trade deal.
This will mean that while the UK formally exits the EU on 29 March 2019, the transition will run until the end of December 2020 and European law will apply throughout this period.
The government has said this will provide "legal certainty" to businesses and individuals.
Dominic Raab, the secretary of state for exiting the European Union, said: "This government is committed to delivering a smooth and orderly Brexit."
But he said the implementation period would be "finite", allowing only for the negotiation of new trade deals.
The government plans to amend the EU (Withdrawal) Act, which passed into law last month and provides the legal basis for Brexit, to introduce a provision which would freeze its effects.
This effectively delays the repeal of the European Communities Act (ECA), the 1972 law which made the UK a member of the EU, until 2021.
The white paper said: "Our view is that repealing and saving the effect of the ECA, for the time-limited duration of the implementation period, is the most effective way to provide continuity and certainty to businesses and individuals."
But the Personal Investment Management & Financial Advice Association (Pimfa) has warned of the consequences of Britain leaving the European Union without a deal, which it said remains a "distinct possibility".
The financial advice trade body said advisers' clients would ultimately face increased cost or a reduction in investment possibilities.
If Britain left the EU without a deal, it would mean British financial services companies would no longer be able to do business in the EU nor European firms in the UK.
The government has previously said the passporting regime will not apply after Brexit but it has called for "enhanced equivalence", another model that would allow companies to sell their services throughout the bloc.
John Barrass, deputy chief executive of Pimfa, said: "At present, focus is on the application of ‘enhanced equivalence' rather than mutual recognition, but equivalence does not apply to dealing with clients in the retail investment sector so, unless the final delineation of enhanced equivalence changes this, there will be no effect on the position of Pimfa firms."
Pimfa warned that the transition was vital for allowing firms to plan for Brexit and that if this is jeopardised in the withdrawal agreement then Brexit would become "disorderly and highly disruptive" for businesses.
damian.fantato@ft.com
