Expats won no concessions from Chancellor George Osborne in his Budget 2016.
Although he pulled a raft of tax savings out of his battered red box, they only apply to tax residents and not expats who have made a permanent home in another country.
The main tax change that hits expats is an enhanced capital gains tax rate for landlords or investors with a second home in the UK.
In a surprise move, Osborne slashed capital gains tax for entrepreneurs and other investors who are not landlords.
The top rate of CGT drops to 20% and the lower rate to 10%.
Expat investors with money in commercial property will reap the benefit, but those with residential property continue to pay CGT at the current rate of 28% or 18%.
Stamp duty changes
Osborne also revised the way stamp duty is paid on commercial property.
The old slab system based on a percentage of the property value is scrapped.
The new calculation is banded, depending on the property value –
- No stamp duty is paid on properties worth up to £150,000
- Duty is paid at 2% on a value between £150,000 and £250,000
- The rate is 5% for a value of more than £250,000
So, for a commercial property worth £325,000, the value is split between the three bands:
- Nothing is paid on the first £150,000
- £2,000 is paid on the value between £150,000 and £250,000
- £3,750 is paid on the remaining £75,000
The total stamp duty due is £5,750.
The changes are immediate from midnight on March 16, 2016.
Income tax thresholds boosted
For expat landlords with a UK personal income tax allowance, the amount where tax is paid at 20% rises from £11,000 to £11,500 in April 2017.
The higher rate threshold (40%) goes up at the same time, from £42,385 to £45,000.
Tax on insurance premiums is also set to increase. IPT is paid on landlord, home, motor and most other policies. The rate goes up 0.5% to 10%, raising an extra £700 million, which is earmarked for spending on flood defences.
Osborne was on his feet for just over an hour giving his eighth Budget speech.
“The economy faces a dangerous cocktail of risks,” he said. “We still face economic challenges and must act now to face them.”
