If you are a national of a country which is a member state of the European Economic Area or Switzerland, or the family member of such a person, you will automatically have permanent residence status after exercising EEA free movement rights in the UK for any continuous period of 5 years ending on or after 30 April 2006.
To evidence that you hold permanent residence status, you should apply for a Permanent Residence Card. Since November 2015, you must obtain a Permanent Residence Card before you can apply for British Citizenship.
When can I apply for British Nationality?
Before applying for British Citizenship, EEA and Swiss nationals must have held Permanent Residence status for at least 12 months. However, it is important to remember that a person automatically acquires permanent residence following 5 years continuous residence in the UK as a qualified person, noton the date that they obtain the residence card itself.
This means that, if a person has resided in the UK for a long period of time, they can send evidence for a 5 year period which ended at least 12 months before they wish to apply for naturalization. Then, once they obtain their permanent residence card, they can apply for British Citizenship immediately.
Those however, that submit evidence from the most recent 5 year period will need to wait a further 12 months before they can apply.
For example, if you apply for Permanent Residence on 1 July 2016 and want to apply for Citizenship once that application is decided, you should send evidence that shows you were a qualified person or family member of a qualified person for the period from 1 July 2010 - 1 July 2015. The date that you were deemed to have acquired permanent residence (1 July 2015) will be recorded on UKVI's database and will be clear to the nationality caseworker. It does not matter that you did not obtain a permanent residence card on 1 July 2015, as long as you obtain one before making a nationality application.