Chancellor George Osborne’s Autumn Statement 2014 delivered little to improve the financial lot of expats.
Having already announced capital gains tax changes for non-residents earlier in the week, probably the main issue that needs resolution for expats is index linking the state pension in countries where pay outs are frozen.
However, Osborne seems to have completed his pension tweaking for this Parliament and expats will have to wait until after the May 2015 general election for any further financial help.
Nom-doms living in the UK were singled out for some special tax attention.
Osborne explained in his speech to a crowded House of Commons that the government wanted to preserve the non-dom status and give certainty over their residency while making sure they paid a ‘fair’ contribution for the privilege.
Nom-dom tax charges
The basic nom-dom charge of £30,000 a year will stay the same during the next Parliament, pledged Osborne.
But non-doms who have been in Britain for 12 of the past 14 years will have to pay a £60,000 charge and those living in the country for 17 of the past 20 years will have to pay £90,000.
Other new measures include:
- To discourage non-residents from buying UK property through an offshore company, the Chancellor has also boosted the annual charge on homes worth more than £2 million by inflation plus 50%.
- Osborne also announced consultations to tackle tax avoidance by umbrella companies employing workers and paying them less than the minimum wage, the transfer of personal assets on incorporating a business and stamp duty on business take overs.
- Entrepreneurs’ Relief is axed from December 4, 2014, where a sole trade or partnership is transferred to a related company.
- A new diverted profits tax or ‘Google tax’ will start from April 1, 2015, charging multinational enterprises that make profits in the UK but divert these profits outside the country to avoid tax. The tax will be charged at 25% of the diverted amount.
Key changes
Other tax measures for UK residents include:
- Raising the ISA savings limit to £15,240 next year
- Raising the 40% income tax threshold to £42,385 from April 6, 2015 with a view of raising the limit to £50,000 by 2020.
- Raising the income tax personal allowance to £10,600 from April 6, 2015
- Revamping stamp duty rules to make the tax cheaper for 98% of homebuyers
“These measures will raise billions of pounds for the economy over the next few years,” said Osborne. “They mean the rich and multinational companies will make the largest contribution towards bringing down the deficit.
“The richest 20% will pay more than the other 80%, which shows everyone is in this together and some cannot opt out just because they can afford to.”
