A Heads up For UK Expats

[denby45]

Not sure whether this has been posted before:

Expats advised to plan ahead for tax changes

Wednesday, August 27, 2014. Ivan Radford @themovechannel

Recent reports suggest that the UK government may withdraw the tax-free personal allowance for expats or other overseas nationals who receive an income from the UK.

http://www.themovechannel.com/news/stories/expats-advised-to-plan-ahead-for-tax-changes-893/

Chancellor George Osborne has indicated that all non-residents may soon have to pay tax on all their UK income – affecting all Britons who rent out their UK property, and even those drawing a Government pension abroad. It is estimated that this could decrease an expat couple’s income by up to £4,000, thanks to the Treasury’s proposals to restrict the tax free-allowance to those with a “strong economic connection” to Britain.

Angelos Koutsoudes, Head of www.OverseasGuidesCompany.com, a free resource for Britons looking to move or buy property overseas, warns: "Sitting alongside the upcoming change of regulation which will enforce capital gains tax on the sale of all residential property owned by overseas nationals and/or UK expats, we would urge expats to review all their sources of UK income.

"It’s important to seek professional advice as soon as possible when planning a move overseas, to find out how these plans could affect you. One option may well be to sell the UK property and move pensions into a Qualifying Recognised Overseas Pension Scheme (QROPS). We deal with enquiries every day from concerned overseas property-buyers wanting to ensure their financial and tax affairs are in order. It’s rewarding to be able to put our readers’ minds at rest by connecting them with recommended tax and financial advisors, who are authorised to advise on all financial planning and taxation matters."

Den

[Expattaff1308]

Posted in UK pensions

[alant]

Underhand, thieving xxx

[crazykopite]

I read this report a number of weeks ago ,if it were to happen it would take a number of years to introduce by then there could well be another Government in power and I am sure that it would be challenged in the court of human rights. It would not effect everyone if I understand correctly it would effect those who are in receipt of a government pension retired civil servant, police, fire, military this would mean the government would be clawing money back into there own coffers it would also effect property owners who rent out there property whilst living abroad , if in the other hand you were receiving your OAP pension and that was your only income then it would not effect you , as stated I do not think it will happen for a number of years if at all if it did then I would have to consider moving back to the UK as I pay a substantial amount of tax to the UK HMRC every month.

[theoldgit]

Yes, it has been posted before, this thread has been running for a couple of weeks on the subject uk-expats-to-pay-tax-on-their-rented-houses-back-home

And as Expattaff1308 has pointed out, it's also been discussed on the uk-pensions thread.

[godden]

where would be a good place to buy a gun

[Chicken George]

As a expat living on my income from property in the UK this would affect me and my two children I have here. Goal posts always being moved. Problem is the expat community had no voice. Ask someone in the street in the UK if they care about expats and they would say "if they live abroad then don't give them any tax allowances"! My pension was stolen by Equitable Life well about 50% of it. And as I took it at age 50 because I thought they would steal the rest of it I cannot get compensation from the government. I cannot take my wife back to the UK only my children as I do not have a large enough income. Now they may take my tax allowances away. This would hurt my family. Not happened yet and I hope sense will prevail. Always the same those of us who have paid their way and are still paying always have to pay more.

Edited August 30, 2014 by Chicken George

[belg]

ah more of your money to feed, house the new immigrants in your old country ...

but you people are still lucky to get (such high) pensions, as some countries state : you do not live here anymore, so no social security, no pension, no (free / included) health care, even you come back , you as a person who might have paid whole his life, you will have to wait at least 6 months for any things we give away for free to people who just came here, never worked, never paid taxes

[DefaultName]

I heard about this one. One thing I'm not sure about is - If I keep UK residency I can still have my tax allowance?

As most of my income will be taxed at source anyway (civil service + state pensions) that would be best for me. So, I suppose the question I'll need answered is; do I HAVE to be a non-resident just because I'm living abroad? I won't have an address in the UK.

Anyone know the answer to this one?

Oh and yes, thieving ba$tard$!

[i claudius]

And they wonder why lots of expats still keep a uk address and bank account.

[beammeup]

I am an offshore worker. I do not come from the UK nor do I work there but I get paid out of the UK so I guess my source income comes from there. Does anyone know if I will now be liable to pay income tax in the UK?

[peterpop]

I read this report a number of weeks ago ,if it were to happen it would take a number of years to introduce by then there could well be another Government in power and I am sure that it would be challenged in the court of human rights. It would not effect everyone if I understand correctly it would effect those who are in receipt of a government pension retired civil servant, police, fire, military this would mean the government would be clawing money back into there own coffers it would also effect property owners who rent out there property whilst living abroad , if in the other hand you were receiving your OAP pension and that was your only income then it would not effect you , as stated I do not think it will happen for a number of years if at all if it did then I would have to consider moving back to the UK as I pay a substantial amount of tax to the UK HMRC every month.

I agree that most will be unaffected, however the nasty gangs of "Financial Advisers"" will use this to generate fear amongst those who are ignorant in financial matters and thus line their own pockets. BEWARE.

[iancnx]

The OP highlights possible changes then is keen to promote the QROPS band wagon. I would be more interested to learn just how long it would take to bring into law. I could then plan on the best time, and the best method to become a UK resident once more. Taking away my personal allowance on my armed forces pension is not an option.

Further people in my position will need to check how to legally become UK resident once again, and watch out for any past capital gains exempt which could potentially bite you in the arse.

Edited August 30, 2014 by iancnx

[hugh2121]

Expats facing the possibility of losing their personal allowance under a tax raid proposed by George Osborne should not panic but look carefully at where their UK sources of income come from, according to experts.

The estimated 175,000 people who live abroad and earn an income from property in Britain could be affected, as could retirees. The measure could cut an expat couple’s income by up to £4,000 a year.

At present, EU nationals and British expats can offset income earned in the UK against the £10,000 personal allowance. Under the Chancellor’s proposals, this would be restricted to people with a “strong economic connection” to Britain.

Many of the 1.2 million British retirees living overseas will not pay extra tax on their pension because they are either UK residents for tax purposes, as they spend half the year in Britain, or because most state or private pensions are only taxable in the country of residence.

However, UK government pensions are only taxable in Britain, meaning that unless the Treasury introduces exceptions, former civil servants, NHS workers and council officials living overseas will pay more tax.

If your income is UK generated and taxed by HMRC, you have a strong economic connection and will retain your personal allowance.

Osbourn is targeting those who work abroad, have no UK income but own a property, rent it out and pay no tax. The rental income being covered by the personal allowance.

Open consultation on gov.uk

Restricting non-residents’ entitlement to the UK personal allowance

Updated 4 August 2014

Contents

1. Introduction
2. Who is entitled to the UK Personal Allowance?

[iancnx]

Hugh, a very useful link, thank you. This is an extract from the consultation paper pertaining to UK government service pensions:

6.6 Pensioners

Pensioners who live overseas are a significant group of British national expatriates, estimated by DWP at around 1,200,000 individuals. Most UK national pensioners living overseas would not be affected by any restriction on non-residents entitlement to the Personal Allowance. This is because:

some are still resident in the UK for tax purposes and so would not be affected by any change

provisions of tax treaties generally mean that UK state pensions, personal pensions or private sector occupational pensions are only taxable in recipients states of residence and not in the UK

many non-resident UK national pensioners do not have any other income (i.e. employment or property) which is taxable in the UK and would not be affected by losing their Personal Allowance

However, under double tax treaties, UK sourced government service pensions (a wide category which includes, amongst others, some NHS staff and those employed by local authorities) are generally only taxed in the UK, regardless of recipients residence status. This can also be the case with some other forms of income under specific treaties. The withdrawal of the UK personal allowance from non-residents in receipt of a UK government service pension would result in them paying more tax overall as there is no overseas tax liability against which the additional UK tax could be relieved.

The government is concerned that individuals, like those in receipt of government service pensions, who are not eligible for double taxation relief, would be disproportionately affected by the removal of the UK Personal Allowance.

The government does not intend to raise taxes on vulnerable groups or in situations where the UK is the principal taxing authority and an individual has no recourse to relief as a result of the UK having sole taxing rights under a tax treaty. If the government were to restrict non-residents entitlement to the Personal Allowance, it would intend this to apply to types of income which are taxable both in the UK and overseas (such as that from immovable property) but to retain the Personal Allowance on income that is taxable exclusively in the UK.

So in short, looks like ex armed forces chaps should be OK. We will see.

[billd766]

ah more of your money to feed, house the new immigrants in your old country ...

but you people are still lucky to get (such high) pensions, as some countries state : you do not live here anymore, so no social security, no pension, no (free / included) health care, even you come back , you as a person who might have paid whole his life, you will have to wait at least 6 months for any things we give away for free to people who just came here, never worked, never paid taxes

Some of us worked for over 50 years to get our pension and are still paying tax on our forward planning for our retirement.

[Baerboxer]

I read this report a number of weeks ago ,if it were to happen it would take a number of years to introduce by then there could well be another Government in power and I am sure that it would be challenged in the court of human rights. It would not effect everyone if I understand correctly it would effect those who are in receipt of a government pension retired civil servant, police, fire, military this would mean the government would be clawing money back into there own coffers it would also effect property owners who rent out there property whilst living abroad , if in the other hand you were receiving your OAP pension and that was your only income then it would not effect you , as stated I do not think it will happen for a number of years if at all if it did then I would have to consider moving back to the UK as I pay a substantial amount of tax to the UK HMRC every month.

I think your are hoping. Osborne wants to push this legislation through as quickly as possible - so they can claim they are closing tax loopholes and making things "fairer" for the British Tax payer prior to the next election. It's as much about politics as the amount of extra tax they will raise.

For us expats, its a double whammy. Loose your personal allowance, have to pay tax on your rental incomes after claiming allowable expenses, and then face capital gains tax when you sell what is still your home. But, we are easy targets.

Human rights - what the EU court? They allow bail out legislation like the UK just implemented so that in the event of another financial collapse or bank(s) needing saving from bankruptcy they can raid your savings accounts of as much as they like at will. Really protecting our human rights!

I wouldn't bet on Labor being any different - they've been very quiet on all this and have a worse record of doling out aid and social spending than the Tories.

I checked my house price last week, up more than I expected and am considering selling up.

I will have a tax review meeting in the next couple of weeks with one of the big tax firms in the UK. I will post any pertinent comments.

[Brian Corrigan]

And they wonder why lots of expats still keep a uk address and bank account.

I you are a non resident your prime resident would be in the country you are living.It is illegal not to inform HMRC of your present address and leave them to believe you are still resident in the UK. Your UK state pension is at risk if you are found out.

[Old Guy]

For the last few months I have been in contact with Hilary Benn on this subject -- he would be my M.P. if I have to return to the U.K. due to this proposal. He wrote some time back to the Chancellor who just confirmed that decisions as to who was economically close to the U.K. would be open and above board. But that does not answer my question to him as to how his (Labour) Party thinks -- for or against ? As a previous poster has said, there could well be a change of Government by next year.

I have been chasing Benn and his Secretaty up for some time but they are all still "on holiday". Very frustrating and worrying.

[glasswort]

Great. We retire to Thailand and are not a burden on the NHS or any other agency. We do not qualify for the yearly increase in the Government pension and now the proposal is to tax the amount we do receive; in my case GBP105.38 per week which represents about half of the GBP10,000 personal allowance.

[chiang mai]

The OP highlights possible changes then is keen to promote the QROPS band wagon. I would be more interested to learn just how long it would take to bring into law. I could then plan on the best time, and the best method to become a UK resident once more. Taking away my personal allowance on my armed forces pension is not an option.

Further people in my position will need to check how to legally become UK resident once again, and watch out for any past capital gains exempt which could potentially bite you in the arse.

Well spotted, it's spam in disguise, MODS!

BTW here's the regs. on UK residency:

http://www.cambridgetax.co.uk/ctp/New_Residence_Rules.html

Edited August 30, 2014 by chiang mai

[theoldgit]

The tax allowance goes up to £10,500 from April.

You also need to bear in mind the whilst the tax allowance has been increasing over the years, the rate at which the 40% kicks in has been quietly decreasing. So for those already paying 40% on part if their income it could mean an extra tax liability of £4,200 a year, with more lower earners being dragged into the higher rate.

[Brian Corrigan]

I understand that all Commonwealth countries lost the right for their British expat pensioners to claim the personal allowance in 2010.There are however, a fair number of expats living in countries other than Commonwealth ones where the loss of the personal allowance could be a factor in determining if they should return to the UK. Lets hope that the following extract from the Governments paper is true

The government does not intend to raise taxes on vulnerable groups or

in situations where the UK is the principal taxing authority and an

individual has no recourse to relief as a result of the UK having sole

taxing rights under a tax treaty. If the government were to restrict

non-residents’ entitlement to the Personal Allowance, it would intend

this to apply to types of income which are taxable both in the UK and

overseas (such as that from immovable property) but to retain the

Personal Allowance on income that is taxable exclusively in the UK.

My words:
The British state pension is exclusively taxable in the UK where there is no reciprocal agreement. Thailand does not have reciprocal agreements with regard to pensions.

[Brian Corrigan]

Any one with a UK private pension paid from a UK source should consider moving it off shore........NOW!

[Brian Corrigan]

I am an offshore worker. I do not come from the UK nor do I work there but I get paid out of the UK so I guess my source income comes from there. Does anyone know if I will now be liable to pay income tax in the UK?

You are not a UK resident and are liable to be taxed on your world wide income only in your country of residence.

[Brian Corrigan]

As a expat living on my income from property in the UK this would affect me and my two children I have here. Goal posts always being moved. Problem is the expat community had no voice. Ask someone in the street in the UK if they care about expats and they would say "if they live abroad then don't give them any tax allowances"! My pension was stolen by Equitable Life well about 50% of it. And as I took it at age 50 because I thought they would steal the rest of it I cannot get compensation from the government. I cannot take my wife back to the UK only my children as I do not have a large enough income. Now they may take my tax allowances away. This would hurt my family. Not happened yet and I hope sense will prevail. Always the same those of us who have paid their way and are still paying always have to pay more.

My pension was stolen by Equitable Life well about 50% of it. And as I took it at age 50 because I thought they would steal the rest of it I cannot get compensation from the government.

If your pension pot is over 100,000 pounds, take it off shore. Sell the property.

[Brian Corrigan]

I heard about this one. One thing I'm not sure about is - If I keep UK residency I can still have my tax allowance?

As most of my income will be taxed at source anyway (civil service + state pensions) that would be best for me. So, I suppose the question I'll need answered is; do I HAVE to be a non-resident just because I'm living abroad? I won't have an address in the UK.

Anyone know the answer to this one?

Oh and yes, thieving ba$tard$!

You need a UK address if you want to be resident and also be able to satisfy the new residency rules. If you are already non resident and taxed on anything above the 10,000 allowance there is no benefit in changing.You will not loose your allowance. If you try to use a false address in the UK, you will be more than likely found out and you run the risk of loosing your pensions.

[iancnx]

The OP highlights possible changes then is keen to promote the QROPS band wagon. I would be more interested to learn just how long it would take to bring into law. I could then plan on the best time, and the best method to become a UK resident once more. Taking away my personal allowance on my armed forces pension is not an option.

Further people in my position will need to check how to legally become UK resident once again, and watch out for any past capital gains exempt which could potentially bite you in the arse.

Well spotted, it's spam in disguise, MODS!

BTW here's the regs. on UK residency:

http://www.cambridgetax.co.uk/ctp/New_Residence_Rules.html

Excellent link, thank you. I had no idea the rules had changed! Let's hope Government Service Pensions are exempt this latest proposed tax legislation.

[chiang mai]

I heard about this one. One thing I'm not sure about is - If I keep UK residency I can still have my tax allowance?

As most of my income will be taxed at source anyway (civil service + state pensions) that would be best for me. So, I suppose the question I'll need answered is; do I HAVE to be a non-resident just because I'm living abroad? I won't have an address in the UK.

Anyone know the answer to this one?

Oh and yes, thieving ba$tard$!

You need a UK address if you want to be resident and also be able to satisfy the new residency rules. If you are already non resident and taxed on anything above the 10,000 allowance there is no benefit in changing.You will not loose your allowance. If you try to use a false address in the UK, you will be more than likely found out and you run the risk of loosing your pensions.

You do not need a UK address to be tax resident.

What the regulations will be under the new rules is not known, it's a subject that is currently under consultation.

[Moonlover]

_{We may not always think very highly of the British government or its tax regime, but, to be fair, they are not known for 'pulling the financial rug' out from beneath its citizens, especially its pensioners.}

_{If this withdrawal of personal tax allowance were to be introduced, and personally, I think that is highly unlikely, a graded and gradual system would be implemented so as not cause financial suffering for many people. The government is just not that heartless.}

_{And like I said, I cannot see this being introduced I think this all just rumour and conjecture. Interesting to note though that this thread originates from someone connected the 'financial services'. A profession I would not trust with my daily noodle allowance!}

Edited August 30, 2014 by Moonlover