Advent - The Arrival of a Notable Event or Person
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The UK Budget, set to start the Advent period, could be a damp squib or the herald of a new tax year ahead. This article, written before the dawn, holds out some optimism, subject to the consideration that the political landscape in the UK is so bad, something has to change.
The Halloween Budget of 2024 introduced massive tax rises, and government spending has only increased since then.
Watch our Live Reaction to the UK Budget Announcement as it happens.
Consider a key point: the current government is committed to supporting and not increasing income taxes for 'working people,' which they define as people earning an income below £45,000. The key point being that this means the 20% taxpayers living and working in the UK - the voters at the next election - and not 40% taxpayers, and not expats.
FIXED
People with bumper public sector pensions have already been dragged into the UK fixed pension income net. These pensions cannot be taxed outside the UK if living and working abroad.
If you have a successful property rental portfolio, this income too is fixed into UK income taxes.
All pensions and property are fixed capital gains and inheritance tax liabilities in the UK as well. Capital Gains Tax went up 80% in the last budget.
EXPATS
For Cyprus-based expats, a UK pension can be drawn to pay a flat rate 5% income tax and free your pension funds from these UK constraints.
The action is not to transfer the pension plan, as that incurs a flat rate 25% tax, but to draw income as an expat living and working abroad in a low-tax country like Cyprus with a 5% flat rate pension tax.
Cyprus also offers 0% tax on interest, dividends, and no capital gains on investments. Finally, there is no inheritance tax.
ACTION PLAN
If you are a Cyprus tax resident of a certain age, you could draw down your whole UK pension fund and only pay a flat rate 5% income tax in Cyprus. Whether the fund is £100,000, £1 million, or £1 million. Even if you are still working, it is still only a 5% flat rate tax.
You can save up to 40% income tax before the Advent Budget. Act now, even if you are not ready to retire - tax saving 40%.
You can gift savings cash outside pensions to friends, family, or charity, saving 40% inheritance tax liabilities. Hold your savings, property, and business in a Cyprus family-based tax-free fund.
AFTER PARTY
You could be reading this article after the advent of a new set of tax laws that hit UK expats living and working abroad and those who have worked, invested, and built wealth in the UK.
As ever, the ProACT advice is to plan ahead. Contact us for a free review and advice on how we could help you save the most tax.
Need help & guidance?
Contact us or book a free review with one of our expatriate experts for help & guidance living or working abroad.
