The UK Chancellor of the Exchequer, George Osborne, recently presented his last Autumn Statement before the General Election next year. There are a few announcements that may affect expats, so a brief overview of some of the most relevant issues is given below.
The Personal Allowance will be increased to £10,600 per person for the tax year 2015-16. The basic rate limit will be £31,785 and the higher rate threshold will be £42,385.
The Government is still deciding whether to restrict entitlement to the personal allowance for non-residents, but this is considered unlikely to take effect before April 2017 as a detailed consultation would need to be undertaken.
Stamp Duty reforms on residential property
Stamp duty is being reformed to remove the steep increases in the tax due caused by reaching each flat rate threshold. Instead the rates will be graduated, resulting in the property buyer paying a marginal rate, which is seen as a fairer approach all round.
The new rules started on 4 December 2014, but if you had already exchanged on a property by that date you have a choice about whether to use the old or new rules. In the majority of cases you will pay less tax under the new rules.
The new rates of stamp duty are:
|Purchase price £||Stamp duty rate payable on price in each band|
|Up to 125,000||0%|
|125,000 to 250,000||2%|
|250,001 to 925,000||5%|
|925,001 to 1,500,000||10%|
|1,500,001 & over||12%|
Whilst contributions to Individual Savings Accounts may only be made by UK residents, there are changes that may affect expats who have existing holdings.
From 3rd December 2014 if an ISA saver in a marriage or civil partnership dies, their spouse or civil partner will inherit their ISA tax advantages. This means that will be able to retain any existing ISAs and the relevant tax advantages. Full details have not yet been issued but this will provide a tax benefit to many widows and widowers.
The annual allowance will increase from £15,000 to £15,240 from 6th April 2015.
Non doms & the remittance basis
Individuals who spend time in the UK, but are not domiciled there (a different concept to being resident and not usually relevant to UK passport holders) are able to elect to pay tax on the remittance basis so any income and gains held offshore are only taxable as and when they are brought into the UK.
Time resident in the UK:
- 7 out of last 9 years – charge unchanged at £30,000 per year
- 12 out of last 14 years – to increase from £50,000 to £60,000 per year
- 17 out of last 20 years – a new charge of £90,000 to be introduced
Should you have any queries as to how these changes may affect you, or on any other financial planning issue, please contact me at firstname.lastname@example.org