What the Autumn Budget means for UK Expats

What the Autumn Budget means for UK Expats

 

The budget was quite quiet in terms of tax changes for UK expatriates, but what became clear is the nation’s debt is not falling as quickly as required and it is likely Government will have to introduce extra taxes at some stage. Chancellor Philip Hammond made a net tax giveaway of £1.6bn in the coming tax year, against a back drop of low productivity and the nation’s debt mountain not falling to its 2007 levels until 2060, according to the Institute of Fiscal Studies.

 

Key points of the Autumn Budget:

 

Property

 

  • The main headline-grabbing move was to give first-time buyers an exemption from stamp duty land tax on the first £300,000 of consideration for properties worth up to £500,000. Some move on this front had been widely expected, and it accounts for over a third of the giveaway.
  • The government announced in 2017 that from April 2019 tax will be charged for gains made by non-residents on disposals of all types of UK immovable property, extending existing rules that apply only to residential property.
  • Local authorities in Britain will be able to double council taxes on empty properties, a move announced by the UK Chancellor that will hit people with second homes. Councils can currently charge up to 50 per cent extra council tax if a home has been empty for two years or more, but they can now charge double this.

 

Taxation of Trusts

  • A consultation document will be published in 2018 on how to make taxation of trusts simpler. A very welcome move for a complex area.
  • There will be changes to rules that relate to the taxation of income and gains accruing to offshore trusts. This measure ensures that payments from an offshore trust intended for a UK resident individual do not escape tax when they are made via an overseas beneficiary or a remittance basis user.

 

Pensions

  • The Lifetime Allowance will be increased for the first time since 2010 by CPI and will be £103m for the tax year 2018.
  • The state pension will also be increased by CPI of 3 per cent under the triple lock - the popular policy that means annual rises in the state pension are decided by whatever is the highest of price inflation, average earnings growth or 2.5 per cent. The basic state pension will rise by £3.65/week to £125.95/week, whilst the new full state pension will rise to £164.33/week.

 

Inheritance Tax

  • The exempt nil rate band remains at £325,000 and the residence nil rate band is raised to £125,000.

 

Brexit

  • A £3bn fund will be established to support new activities and changes required to support business because of Brexit.

 

Income Tax

  • The Chancellor was less generous on the income tax front, increasing both the personal allowance and the higher rate threshold by 3 per cent – the standard inflation-linked increase. He gave nothing away to individual savings account (ISA) investors, freezing the main ISA and lifetime ISA investment limits.
  • The indexation allowance for companies’ capital gains will be abolished in January to bring the corporate tax system in line with personal capital gains tax. From next year, tax will be payable on the whole return, including anything which simply keeps pace with inflation. However, the change could possibly effect millions of pension savers who might have to pay around an extra £50 in tax – which is not a huge, but with so many people affected, it adds up. HM Treasury hopes to raise at least £500,000 a year once this policy is fully implemented.

 

Click here for an overview of all the latest rates and allowances from the Autumn Budget 2017.

 

This content is for information and guidance purposes only. It does not constitution any legal or financial advice and should not be relied on as legal or financial advice in relation to a particular situation. The content herein reflects information available as at 15th of March 2017.