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ProACT Sam Orgill considers options open to tax raising governments and how UK expats could find tax creep this winter.

The UK’s “Halloween Budget”  (a term sometimes used for autumn budgets delivered around late October) could affect UK expats in several ways, depending on the specific measures introduced.

While no official details for a 30th October 2024 Halloween Budget are available yet, here are some common areas of concern for expats based on prior budgets:

Taxation on Worldwide Income

• Changes to UK Non-Resident Tax Rules: UK expats, particularly those classified as non-residents for tax purposes, could see changes in how their income or capital gains are taxed. The UK generally taxes expats on UK-source income, but changes in rules around double taxation agreements, overseas pensions, or personal allowances could alter expats’ tax liabilities.

• Reform of Capital Gains Tax (CGT): If the budget includes a rise in CGT or changes to rules on property disposals, expats owning UK property could face higher tax bills when selling.

Pensions and Savings

• Changes to Pension Tax Relief: Many UK expats still have UK pension pots. Changes to pension tax relief could affect how much expats can contribute tax-efficiently or how their withdrawals from UK pensions are taxed abroad.

• Overseas Pension Transfers: If rules around Qualifying Recognised Overseas Pension Schemes (QROPS) are tightened, expats looking to transfer their pensions overseas could face increased taxes or restrictions.

Property and Stamp Duty Changes

• Property Taxation: UK expats owning property in the UK could be impacted by changes to Stamp Duty Land Tax (SDLT) or additional surcharges on non-resident buyers. Any increase in these taxes could make purchasing or maintaining UK properties more expensive.

• Non-Resident Landlord Taxes: Expats who rent out their UK properties through the Non-Resident Landlord (NRL) scheme might be affected by changes in how rental income is taxed or new reporting requirements.

Inheritance Tax (IHT)

• Inheritance Tax Reforms: If the budget includes changes to inheritance tax, this could affect expats who hold assets in the UK or those with worldwide estates if they remain domiciled in the UK. Reforms may make estate planning more complex or costly for UK expats.

Currency Exchange and Investment Impact

• Exchange Rates: Budgets can influence exchange rates, and expats relying on sending money back to the UK or converting income from UK sources may be affected by fluctuations in the value of the British pound.

• Changes to Investment Taxation: If the budget introduces new taxes on dividends, capital gains, or wealth, expats with UK investments might see a change in the returns they earn or how their investment portfolios are taxed.

Healthcare and National Insurance Contributions (NICs)

• NICs for Overseas Workers: Expats working abroad but still connected to the UK social security system could see changes in their obligations to pay National Insurance Contributions.

• Healthcare Funding: Any adjustments to the NHS surcharge for expats or access to healthcare while living abroad might also come into play.

Regulation and Compliance

• Reporting Requirements: Expats might face new compliance burdens if the UK government tightens reporting requirements for offshore assets or foreign income. This could mean additional administrative work or penalties for non-compliance.

• Wealth Taxes or Offshore Crackdowns: If the government focuses on wealth taxation or tightening the rules around offshore tax structures, expats using tax-efficient vehicles might face increased scrutiny or financial penalties.

Read more

Who, What, when & How will Labour Change tax in the October budget?

UK Tax 2023-24

ProACT Know How

Each budget can bring a variety of measures that might affect UK expats, from changes in taxation and property laws to adjustments in pension and investment rules. The Tax Creep for UK expats could be significant to initiate new tax revenue source for the government to spend.

To protect your family and business income and capital talk to ProACT for know how.