It’s a new UK tax year and it’s limped in with a pile of new rates and thresholds for savings, pay and pensions.
To help expats make the most of the changes, the key point is proving residence for the 2014-15 tax year.
Whatever has gone before, any financial opportunities were locked down on April 5 when the last tax year closed and cannot now be changed.
But by proving tax residence, an expat can roll-out any chances to save tax for the coming year.
The statutory residence test, or SRT, determines a person’s tax status in the UK. Many expats who believe they are non-resident will find that their tax status is still firmly rooted in Britain even if they have lived overseas for many years.
Tax ups and downs
The downside is they have to pay tax in the UK, but the upside is they can still take advantage of tax reliefs and allowances – like pension contribution relief.
Each expat should carry out the SRT at the beginning of every tax year to take account of any personal and tax changes.
Many accountants, tax consultants and financial advisers publish guides to SRT.
One of the most useful and easiest to follow is on the global accountancy firm KPMG’s web site
The big tax change expats and non-residents who own homes in Britain need to consider is Chancellor George Osborne’s proposals to tax any chargeable gains on the disposal of the properties in the UK.
The exact details, like tax rates and fleshing out the bones of the proposal are as yet unknown.
Pensions and QROPS
However, capital gains tax for expats and non-residents will start from April 6, 2015, so anyone with property disposals in mind needs to get on the case if they expect to make a large profit from the sale.
The other big tax change for expats and non-residents is accessing pension cash.
Rules have already changed for defined contribution schemes – but the Chancellor looks set to ban transfers out of defined benefit or final salary schemes in the public sector or for civil servants.
If the ban is imposed, expats with defined benefit schemes would lose the opportunity to switch to offshore Qualifying Recognised Overseas Pension Schemes (QROPS).
The decision requires careful weighing up as final salary schemes can come with hard to replace additional benefits, but QROPS offer more flexible investments and tax advantages.
