This is the first budget of this Government and the first by Chancellor, Rishi Sunak, less than a month after taking over at the Treasury.
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 UK press will cover many points in detail but much of this is not directly relevant to expats so this article focuses of the relevant points for us. I have included specific measure related to COVID-19 as this has a significant impact on the economy and a wide-ranging, knock-on effect.
Good news for businesses and mortgage holders, not so much for savers.
UK Stamp Duty
The big announcement for many expats is the announcement of a tax surcharge on property purchases as first mentioned in the UK Budget of October 2018.
There will be a Non-UK Resident Stamp Duty Land Tax (SDLT) surcharge of 2% on any non-UK residents purchasing residential property in England and Northern Ireland from 1st April 2021.
There is no other detail in the full Budget, no mention of thresholds or second properties, but no doubt we’ll get some clarity in the coming weeks. It sounds as if this is a flat charge on top of the existing rates,
As expected, the first part of the budget announcement was dedicated to this topic with a number of announcements. Although I don’t usually cover too much in the UK in detail, all British expats have friends and family in the UK and so this has relevance to us all.
It was announced that extra resources will be made available to the NHS. This is a £5bn response fund.
Changes to Statutory Sick Pay (SSP) for a period of time. It can be claimed from day one of illness, not day four. It will also apply to anyone who is recommended to self-isolate even if they are not ill.
SSP is paid by the employer so for SMEs (small and medium enterprises) with fewer than 250 employees, SSP costs will be refunded by the governments for the first 14 days.
Some businesses will require loans to get through difficult times. Temporary business interruption loans to be provided by banks, 80% guaranteed by the UK Government.
£500m hardship fund to local authorities to support those in difficulties
£1bn commitment to support people at a difficult time
Request to HMRC to allow the self-employed and small businesses to have time to pay tax bills if required a dedicated helpline for those who need a deferral period on their tax liabilities
Business rates to be abolished for the next tax year for retail, leisure and hospitality firms in England.
Cash grant of 3,000 to the small businesses who don’t pay rates.
Most of these announcements are for smaller business and will have far less impact on larger businesses who pay the bulk of rates but larger companies should have better cashflow management and contingency plans.
£5bn emergency response fund for the NHS which can be increased if required.
A promise to spend an extra £6bn on the NHS, to pay for 50,000 more nurses, 50 million more GP surgery appointments and work to start on 40 new hospitals. Obviously, this won’t happen overnight.
The Immigration Health Surcharge will be increased to £624 but there will also be a new discounted rate of £470 for children in recognition of the increased financial impact on families.
- Increase in National Insurance threshold. Claimed saving of £104 a year for the average person although the Institute of Fiscal Studies has stated the average saving would be £85.
- Abolition of the ‘tampon tax’ so no VAT of personal hygiene products.
- Planned increases in duty on spirits, beer, cider and wine to be abolished.
- Fuel duty frozen for another year.
- Increase in money available for flood defences.
- £2.5bn pothole fund, allocated as £500m for each of the next five years.
- Abolition of VAT on all books, newspaper and magazines, whether printed or digital.
- £643m of funding to help those sleeping rough and to put roofs over their heads.
- Announcements of significant funding on infrastructure.
- Lifetime Allowance for pensions to increase to £1,073,010 in the tax year 20/21.
- £1bn fund for cladding removal on high rise buildings.
Would we have seen all these measures without the threat of the Coronavirus? Would the money that has been found for this have been allocated elsewhere? Sunak announced a £30bn stimulus to support the economy but this is a substantial change to previous statements in the last 10 years. The UK certainly has substantial problems after the uncertainty of the last three and a half years but there is more to come.
Coronavirus measures apart, this budget seems to be more generous than Treasury coffers allow if they meet their own guidelines so we need to watch out for hidden tax rises once all the announcements have been digested, or in the future.
I have read through the budget (all 125 pages of it so you don’t have to!) and there is nothing else specifically related to taxing expats.
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