The Long Arm Of UK Taxation ? Changes Affecting Expatriates

23.09.14

Please note that this article is over six months old. While Blevins Franks takes care to make sure that information is accurate on the date of publication, some content may change over time. You should not rely on the accuracy of legislation and tax information in this article; take professional advice for your circumstances.

British expatriates are generally pleased to have left UK taxation behind them. However you still need to understand how the UK tax regime may continue to affect you and your heirs, and follow any proposed tax reforms. There are a few changes at the moment that may impact you.

British expatriates are generally pleased to have left UK taxation behind them. However you still need to understand how the UK tax regime may continue to affect you and your heirs, and follow any proposed tax reforms.

There are a few changes at the moment that may impact you.

Taxing non-residents on property gains

Under current rules, provided you are non-UK resident for five years, you do not pay UK capital gains tax when selling UK assets.

This will change from next April, when non-residents disposing of UK residential property will start being charged UK tax on the gains.

At the time of writing we do not have final details on how this will work. However, under the proposals in the government’s consultation document, non-residents would be taxed the same as residents, so at rates of 18% and 28%, with a £11,000 allowance.

The consultation is not entirely clear, but it looks like only gains arising from April 2015 would be taxed.

Restricting the personal allowance for non-residents

The UK government is considering withdrawing the personal allowance from non-residents.

UK nationals are currently entitled to the UK personal tax exempt allowance of £10,000 whether they are resident in the UK, Portugal or elsewhere. A new consultation document proposes to restrict non-residents’ entitlement, unless they have strong economic connections with the UK.

This could affect those with UK pension and rental income, and anyone who earns a salary or other income from the UK.

Providing more pensions freedom

This is more positive news, as the government has decided that, from April 2015, individuals aged over 55 will be able to withdraw as much of their pension funds as they wish.

For UK taxpayers, any amount over the 25% tax free lump sum would be taxed at individual’s marginal UK tax rate. You have to consider tax in your country of residence; in some countries there could be advantages for you.

The 55% death benefit charge on pensions remaining invested when the holder dies will be cut, with a new rate announced later this year. We also need to wait to see if the government will review the QROPS rules following these reforms.

All in all, you should seek specialist advice to review your UK assets and consider their tax efficiency. It may be time to make changes.

25 August 2014

Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual is advised to seek personalised advice.

Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; individuals should seek personalised advice.

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