Whilst the announcement of a new “sugar tax” is the part of the Budget grabbing the headline, there were a number of measures that will affect expats. This article is a brief overview of some of the main points with particular reference to any changes that have relevance to those living outside of the UK.
The Personal Allowance threshold will increase from £10,600 in the current tax year to £10,800 from April 2016. As announced in previous budgets the Allowance will increase to £11,000 in 2017/18. The Government has repeated the pledge to increase it to £12,500 by 2020.
The Personal Allowance is steadily removed once someone has UK annual income over £100,000. The threshold for higher rate tax (40%) will also rise in 2017, from £42,285 to £45,000 in 2017/18.
Capital Gains Tax
The rates will be cut with effect from April 2016 – but not in respect of residential property so of no use to expats selling a house in the UK. For other gains, the higher rate will reduce from 28% to 20% and the basic rate from 18% to 10%.
Class 2 National insurance contributions are to be abolished with effect from April 2018. Where expats have been making this class of payments, often as advised by HMRC on leaving the UK, they will now pay Class 3A. These are voluntary contributions but allow individuals to continue to build entitlement to the UK Basic Pension.
Pensions & ISAs
The expected restrictions on contributions to pensions did not happen but it seems that this Government favours ISAs (individual Savings Accounts) over pension plans as they have announced a new Lifetime ISA. This is for people aged under 40 in April 2017 and will allow them to save up to £4,000 a year and receive a 25% bonus from the government with the main idea being that the monies are used for property purchase or retirement. Not that this is only available for people who are UK resident for tax purposes as non-resident are not permitted to make contributions to any ISAs although any ones set up before leaving the UK can be retained.
The Government has also stated that the UK pensions industry will design, funds and launch a “pensions dashboard” by 2019. This is to be a mechanism whereby an individual can view all their retirement savings in one place but seems to simply be a vehicle to see that someone has and is no substitute for professional investment management.
Support for the Oil & Gas industry
From 1st January 2016 the Petroleum Revenue Tax is to be permanently reduced from 35% to 0%, so effectively abolished. The Supplementary Charge will also be reduced from 20% to 10%. There will also be further funding for seismic surveys of the United Kingdom Continental Shelf.
Insurance premium Tax will increase from 9% to 9.5% from 1st October, increasing the cost of home and motor insurance.
Investment of £71 million to enable individuals and small businesses to contact HMRC easier with a new secure email service, new phone lines and a “webchat” service that will be open seven days a week from April 2017.
I have read through this Budget (all 148 pages of it so you don’t have to!) and there is nothing specifically related to taxing expats so that’s good news.
I write articles such as this one as part of the holistic personal financial planning service that I provide to expats. Should you have any queries on the latest budget, or any other financial planning issues, please do not hesitate to contact me. firstname.lastname@example.org