The UK budget this week

[Guderian]

The media is full of rumours about what taxes will be raised and what thresholds frozen. I was talking to a friend here two days ago who used to work in investment banking in London, so he's not daft about financial matters, and he said he'd heard a rumour that the tax-free allowance for expats would be removed completely. That would cost most UK expats around £2,500/year, so not at all nice if he's right, but I haven't seen this rumour anywhere else. I know that it's also one that's been trailed several times before at budget time in the pre-pandemic era, but it never happened. Has anyone else heard this tale?

[roo860]

Didn't even know there was a tax allowance for expats.

[scubascuba3]

I've heard maybe 40% threshold being reduced. Tax spending cuts also

[Mac Mickmanus]

Are you talking about the income tax threshold where you don't pay tax on income below 12 000 GBP ?

[Guderian]

4 minutes ago, Mac Mickmanus said:

Are you talking about the income tax threshold where you don't pay tax on income below 12 000 GBP ?

Yeah, that's the one, it's currently £12,570, so if we lose that it'll be taxed at 20%, costing us £2,640, assuming your UK pension(s) are worth that much. It's clear enough that the tax-free allowance isn't going to increase, but given that the state pension is frozen if you live in most countries outside of Europe and the US, it would be a bit harsh to also remove the tax-free allowance.

Edited November 13, 2022 by Guderian

[Kwasaki]

15 minutes ago, Guderian said:

The media is full of rumours about what taxes will be raised and what thresholds frozen.

Don't read the media my pension is already frozen. ????

[Mac Mickmanus]

18 minutes ago, Guderian said:

Yeah, that's the one, it's currently £12,570, so if we lose that it'll be taxed at 20%, costing us £2,640, assuming your UK pension(s) are worth that much. It's clear enough that the tax-free allowance isn't going to increase, but given that the state pension is frozen if you live in most countries outside of Europe and the US, it would be a bit harsh to also remove the tax-free allowance.

The 12 570 tax threshold is being kept in place for people living in the U.K and other Foreign Countries , but the Government is considering removing that threshold for people living in Pattaya , reason being that they spend too much money on alcohol and things and it gets them into trouble and other problems , so taxing their pension income will benefit both them and the UK economy

[anchadian]

Chancellor Jeremy Hunt warns ‘we’re all going to be paying more tax after autumn statement’

 

https://www.youtube.com/watch?v=Q-kDCyQgO8Y

 

 

[metisdead]

Moved to the UK & Europe Topics and Events forum.

[TorquayFan]

Hey Gud . . .

 

Your "I was talking to a friend here two days ago who used to work in investment banking in London, so he's not daft about financial matters, and he said he'd heard a rumour that the tax-free allowance for expats would be removed completely. That would cost most UK expats around £2,500/year, so not at all nice if he's right."

 

'My M8 heard a rumour'. I'm sorry but  is no basis on which you should assemble your fears . . . IMHO there is ABSOLUTELY no chance of that happening. NONE AT ALL.

What would be the point anyway ? as it would raise bigger all in revenue and lead to a deluge of returning Expats being put up in the UK at Govt expense.

 

I'm sure your GBP 12,750 threshold is safe. IMO relax. ATB

[RayC]

1 hour ago, TorquayFan said:

Hey Gud . . .

 

Your "I was talking to a friend here two days ago who used to work in investment banking in London, so he's not daft about financial matters, and he said he'd heard a rumour that the tax-free allowance for expats would be removed completely. That would cost most UK expats around £2,500/year, so not at all nice if he's right."

 

'My M8 heard a rumour'. I'm sorry but  is no basis on which you should assemble your fears . . . IMHO there is ABSOLUTELY no chance of that happening. NONE AT ALL.

What would be the point anyway ? as it would raise bigger all in revenue and lead to a deluge of returning Expats being put up in the UK at Govt expense.

 

I'm sure your GBP 12,750 threshold is safe. IMO relax. ATB

There are an estimated 5.5m Brits abroad so - assuming that they are all have £12,500 income - abolishing the tax-free allowance would raise +/-£13.75 billion. Hardly a trivial sum so it's a valid concern.

 

However, imo the easier target are the non-doms. Abolishing their status - assuming that they don't all leave - would raise +/-£18 billion and very few of the electorate would have much sympathy for them.

[RayC]

31 minutes ago, RayC said:

There are an estimated 5.5m Brits abroad so - assuming that they are all have £12,500 income - abolishing the tax-free allowance would raise +/-£13.75 billion. Hardly a trivial sum so it's a valid concern.

 

However, imo the easier target are the non-doms. Abolishing their status - assuming that they don't all leave - would raise +/-£18 billion and very few of the electorate would have much sympathy for them.

Just realized that I greatly exaggerated the figure. Of the 5.5 million Brits abroad, 1m are pensioners. The majority of the remaining 4.5m are presumably working and paying local income tax. Unless they are renting out their homes in the UK or have significant investment income, they are probably unaffected.

 

I would hazard a guess that removing the tax allowance from this group would raise +/-£4-5 million. Not a drop in the ocean but a lot less significant.

[scubascuba3]

11 hours ago, Guderian said:

Yeah, that's the one, it's currently £12,570, so if we lose that it'll be taxed at 20%, costing us £2,640, assuming your UK pension(s) are worth that much. It's clear enough that the tax-free allowance isn't going to increase, but given that the state pension is frozen if you live in most countries outside of Europe and the US, it would be a bit harsh to also remove the tax-free allowance.

If true that will effect a lot of Brits who rely on a govt pension only which is low anyway and will get lower

[Dogmatix]

8 hours ago, RayC said:

Just realized that I greatly exaggerated the figure. Of the 5.5 million Brits abroad, 1m are pensioners. The majority of the remaining 4.5m are presumably working and paying local income tax. Unless they are renting out their homes in the UK or have significant investment income, they are probably unaffected.

 

I would hazard a guess that removing the tax allowance from this group would raise +/-£4-5 million. Not a drop in the ocean but a lot less significant.

I suspect the numbers are more. The  frozen pensions group on FB estimates 500,000 with frozen pensions, mostly in Oz, NZ and Canada but there must be more than that with pensions that aren’t frozen in the EU, US, Philippines and other countries where they qualify for the increments. Then there are expats and foreigners who own property and shares in the UK and have to pay UK tax on rent and dividends.

 

Since it has been mooted before the Treasury must think it’s worth going for. We already know from the frozen pensions they feel taking money from expats, especially pensioners, is like taking candy from a baby. They have no effective way to fight back via the ballot box and voters in the UK hate them because they escaped the misery of British weather and incompetent and corrupt government there.

[Chomper Higgot]

I see the tax free lump sum option in private and company pension schemes as a sitting duck.

 

It’s removal has been raised as a possibility since the days of John Major.

 

Removal of the tax free allowance for non residents is, as discussed, a possibility.

 

However, I expect the biggest issue will be cuts to public spending and services, AKA Austerity #2.

 

The economy is facing an 18 month recession, it’s too good an opportunity to dismantle public services, he’ll not be able to restrain himself.

 

 

 

 

[TorquayFan]

I'll stand by this - "IMHO there is ABSOLUTELY no chance of that happening. NONE AT ALL." I promise to humbly apologise if I am wrong . . .

 

Just musing about those on a state OAP only - I mean how much is that ? Say GBP 500 a month ? GBP 6,000p.a.

 

Paying 20% on that would leave GBP 4,800p.a. THAT would be unbelievably cruel to those also already outside the UK benefit/healthcare system by virtue of being abroad. Many would go home and cost the UK far more than this paltry saving.

 

IMO this alarming proposition, just ain't gonna happen !

[scubascuba3]

Looks like Conservatives are worse than labour for tax these days

[scubascuba3]

Just now, TorquayFan said:

I'll stand by this - "IMHO there is ABSOLUTELY no chance of that happening. NONE AT ALL." I promise to humbly apologise if I am wrong . . .

 

Just musing about those on a state OAP only - I mean how much is that ? Say GBP 500 a month ? GBP 6,000p.a.

 

Paying 20% on that would leave GBP 4,800p.a. THAT would be unbelievably cruel to those also already outside the UK benefit/healthcare system by virtue of being abroad. Many would go home and cost the UK far more than this paltry saving.

 

IMO this alarming proposition, just ain't gonna happen !

thing is they might think retired expats must be loaded to retire abroad

[TorquayFan]

CH - "I see the tax free lump sum option in private and company pension schemes as a sitting duck." That's a different subject of course but a possibility I agree.

 

 

[TorquayFan]

Scuba - many are observing that there's not too much between Tory and Labour tax/economic policy atm but let's face it, Labour will always tend to favour taxing higher income groups and the more well off - they won't be inhibited so much by the worry of causing offence in that sector !

 

Also, remember that the UK Govt know what incomes most Expats have, (as long as those incomes arise in the UK), so they'll know, for example, that I for one, am NOT loaded.

 

ATB

[theoldgit]

2 hours ago, scubascuba3 said:

If true that will effect a lot of Brits who rely on a govt pension only which is low anyway and will get lower

 

It's not only those who rely on their State Pension, those of us also receiving an occupational pension would also be affected as it's more likely that their pension would far exceed the Personal Allowance.

 

The other thing that is currently in effect is the freezing the rate at when the 40% rate kicks in, those "lucky enough" to already be paying 40% on some of their combined pension would see any increases in their occupational pension being charged at at 40% on all of their pension increase.

 

There are lots of rumours about what will be in the Autumn Statement but the truth is that nobody knows for certain, even those who used to work as an investment banker, who can only make an educated guess. The possibility of this happening raises it's head every year or so, but it would probably please the Daily Mail reader, some of who believe that expats shouldn't even receive a pension.

 

I personally don't think it will happen as the Chancellor would need to take account of the possibilty that the removal of the PA for expats might well be the tipping point for those considering returning to the UK, which would cost the Exchequer even more.

[TorquayFan]

TOG - your 1st para. Yes removing the personal allowance GBP 12,570 would hit OAP's and those with private pensions too, at 20% of whatever they have in total, (arising from UK sources). IMO that would be outrageous!

 

Freezing the level that triggers 40% tax rate would be a 'stealth' rise and might be likely across the board. (IMO that's a mighty good pension - wish I had one!)

 

BTW I read the DM and DO think OAPs must be paid to Expats. 100% ! You are right - the 'rumour mill' is going crazy atm !! Partly caused by Govt. leaks to test the water which IMO is pathetic. Decide what's right to do, in balance, and get on with it I say !

[Surasak]

14 hours ago, Guderian said:

Yeah, that's the one, it's currently £12,570, so if we lose that it'll be taxed at 20%, costing us £2,640, assuming your UK pension(s) are worth that much. It's clear enough that the tax-free allowance isn't going to increase, but given that the state pension is frozen if you live in most countries outside of Europe and the US, it would be a bit harsh to also remove the tax-free allowance.

That tax Threshold is staying @£12,570 according to yesterdays UK papers. Problem being, until Hunt gets up on his hind legs in parliament on Thursday, we cannot be sure.

[JonnyF]

That would be incredibly bad form to reduce/eliminate the tax free limits for expats.

 

It would affect me on property I rent out in the UK, but it wouldn't be the end of the world. But for OAP's relying on meagre pensions, to be taxed on that would be a disaster. It would see many return home and cost the government a lot of money, so for the negligible sum it would raise I don't believe it would be worth it. However, with Sunak and Hunt in charge and the economy in the toilet due to ridiculous lockdown policies, it could happen.

 

I'd put this in the 'possible but unlikely' box.

[theoldgit]

32 minutes ago, TorquayFan said:

Freezing the level that triggers 40% tax rate would be a 'stealth' rise and might be likely across the board. (IMO that's a mighty good pension - wish I had one!)

 

Of course it's something Sunak put in place when when he was Chancellor, and yes you're right it's a stealth rise, I think Hunt will increase the length of the freeze meaning that many more will be dragged into the higher rate over the years, maybe even you.

[TorquayFan]

TOG - I'll never be dragged into that one, unfortunately. Well that is, not unless I live to be 150 LOL

 

 

[LittleBear57]

18 hours ago, TorquayFan said:

Hey Gud . . .

 

Your "I was talking to a friend here two days ago who used to work in investment banking in London, so he's not daft about financial matters, and he said he'd heard a rumour that the tax-free allowance for expats would be removed completely. That would cost most UK expats around £2,500/year, so not at all nice if he's right."

 

'My M8 heard a rumour'. I'm sorry but  is no basis on which you should assemble your fears . . . IMHO there is ABSOLUTELY no chance of that happening. NONE AT ALL.

What would be the point anyway ? as it would raise bigger all in revenue and lead to a deluge of returning Expats being put up in the UK at Govt expense.

 

I'm sure your GBP 12,750 threshold is safe. IMO relax. ATB

 

I am very concerned about this as I doubt if I could stay here if I got hit by a 2500+ tax bill. So hope you are right Torquay fan. I see your logic as I would not be the only one returning home putting a strain on the NHS and housing etc.

Edited November 14, 2022 by theoldgit
Response to quote tidied up.

[Toby1947]

George Osborne was about to introduce it several years ago, but it was stopped by the EU. Of course the U.K. is no longer a member of the EU so anything could happen. Expats all over the world should prepare for a hit of over £2000 a year 

[Mike Teavee]

16 hours ago, Guderian said:

he'd heard a rumour that the tax-free allowance for expats would be removed completely. That would cost most UK expats around £2,500/year,

I think you're referring to the PTA (Personal Tax Allowance) & for the UK to remove it would involve them having to renegotiate DTA's (Double Tax Agreements) with almost every country it has one in place with as they could only remove it from "Non-UK Resident for tax purposes" people which includes Non-UK citizens. 

 

There are huge differences between being Non-Domicile (You don't live there) Non-Tax Resident (You pay tax on less things there ) & a Non-UK citizen (You don't have a UK Passport). 

 

https://www.gov.uk/tax-uk-income-live-abroad/personal-allowance#:~:text=You'll get a Personal,time during that tax year

 

Personal Allowance

You’ll get a Personal Allowance of tax-free UK income each year if any of the following apply:

• you hold a British passport
• you’re a citizen of a European Economic Area (EEA) country
• you’ve worked for the UK government at any time during that tax year

You might also get it if it’s included in the double-taxation agreement between the UK and the country you live in.

 

 

Edited November 14, 2022 by Mike Teavee

[Toby1947]

2 hours ago, TorquayFan said:

I'll stand by this - "IMHO there is ABSOLUTELY no chance of that happening. NONE AT ALL." I promise to humbly apologise if I am wrong . . .

 

Just musing about those on a state OAP only - I mean how much is that ? Say GBP 500 a month ? GBP 6,000p.a.

 

Paying 20% on that would leave GBP 4,800p.a. THAT would be unbelievably cruel to those also already outside the UK benefit/healthcare system by virtue of being abroad. Many would go home and cost the UK far more than this paltry saving.

 

IMO this alarming proposition, just ain't gonna happen !

Problem is most crawl back home to use the good old NHS & benefits when things start going wrong due to the lack of insurance. Dont think the population and government don't know this