Buried amongst
the Budget Day announcements is a potential nasty shock for British expatriates
- the Government intends to begin a consultation process on whether and how the
Personal Allowance could be restricted to UK resident taxpayers and to those
living overseas “with strong economic connections” in the UK.
This move
is designed to bring the UK in line with most other EU countries where
non-residents get no tax benefits when determining income which is taxable.
Typically, the types of income on which UK non-residents actually pay UK
tax are limited under the various Double Tax Agreements to income such as UK rental
income or UK Government Service pensions.
It begs the
question, what exactly are “strong economic connections” and we are sure this
is going to be vigorously debated during the consultation process. It is to be hoped that the retained ownership
by British citizens of their former family home, now let out to produce an
income, and UK public sector pensions will be within the definition of “strong economic
connections”!
Add this to the move announced in the Autumn Statement whereby it is intended to introduce a UK capital gains liability from April 2015 for non-residents disposing of UK sited residential property and it is understandable why British expatriates are beginning to feel the sand shifting under their feet.
Add this to the move announced in the Autumn Statement whereby it is intended to introduce a UK capital gains liability from April 2015 for non-residents disposing of UK sited residential property and it is understandable why British expatriates are beginning to feel the sand shifting under their feet.