UK Tax – what recent budget changes may affect me as an expatriate ?

U.K. State Pension.

With the U.K. government’s ‘triple-lock’ commitment, the State Pension is currently increased each year by whichever is highest of inflation or 2.5% or average earnings.

This means those on the older State Pension will see a 3.9% rise, from £129.20 to £134.25 per week (£262.60 extra a year).

Lifetime allowance (LTA).

This continues to increase with inflation (as defined by the Consumer Price Index), adding an extra £18,100 to the maximum amount that can be held in U.K. pensions tax-free.

Currently, combined pension benefits up to £1.055 million avoid 25% or 55% LTA tax penalties, and from April 2020, this threshold is £1,073,100.

QROPS Pension Transfers.

There were no changes to transfers to EU/EEA-based Qualifying Recognised Overseas Pension Schemes (QROPS), which remain tax-free for EU residents.
However, the UK’s 25% ‘overseas transfer charge’ remains for non-EU/EEA transfers.

This may be extended once the Brexit transition period ends in December 2020.

U.K. Inheritance Tax (IHT).

The threshold remains frozen at £325,000 per person, as has been the case since 2009.

The residential nil-rate-band has increased from £150,000 to £175,000 per person, which provides extra tax relief when passing on a main U.K. residence to direct descendants.

For expatriates, overseas property can qualify (provided it is your main home) however local taxes may still be applied.

U.K. Property: Stamp duty for non-residents.

Last year, the government consulted on the introduction of a stamp duty surcharge for non-U.K. residents buying properties in the U.K.

The Budget confirmed a 2% surcharge from 1 April 2021, applicable on top of all existing stamp duty.

So, non-U.K. residents who already own a home in the U.K., could face up to 17% in stamp duty costs from April 2021; this is made up of the usual stamp duty charge (up to 12%), plus the 3% surcharge for second homes, plus 2% non-resident stamp duty.

Related Articles

MASTHEAD FAIS COMPLIANT SEAL FOR 2023

Northern Cross Wealth Management are proud to announce that we have been awarded the Masthead FAIS Compliant Seal for 2023.  This is the seventh consecutive year we have been