The government is planning more tax and pension blows to hit expats in the pocket.
Following an announcement to charge overseas residents capital gains tax on the sale of homes in Britain, the next expat targets are the £10,000 a year personal income tax allowance and halving the state pension deferral rate.
Financial experts claim the measures will make expats significantly worse off.
Chancellor George Osborne announced in Budget 2014 that he was considering abolishing the income tax personal allowance for expats.
The move will cost a basic rate taxpayer £2,000 as they will have to pay income tax on qualifying British investments, savings and pension payments.
Pensions minister Steve Webb has also made public his intention to cut the state pension deferral rate from 10.4% to 5.8%.
State pension deferral
The deferral rate is annual an uplift in the state pension paid for every year the benefit is not claimed.
The new rule will affect anyone hitting state pension age after April 2016.
Deferring the state pension for a year earns someone £635, which will reduce by £294 a year to £341 a year from April 2016.
Deferring the state pension for anyone who can afford to do without the cash is one of the best saving decisions a pensioner can make as few investments return anywhere near 10.8% a year.
Combined, the three measures will make the government billions of pounds a year in extra tax revenues.
CGT for expats
Thousands of expats relying on selling homes in the UK to fund their retirement will pay capital gains tax on the proceeds from April 2015, causing them to rethink their later years finances.
Similarly, they will also lose any tax free income tax allowance on rents and income from investments and pay tax starting at 20%.
The personal allowance consultation released by the Treasury explained many countries in the European Union, the US, Canada and Australia, already limit tax allowances for expats so that the benefit only applies to tax residents.
A spokesman said; “The government wants a tax system that is simple to follow and operate. The government is committed to ensuring that anyone benefitting from Britain’s economic and social success pays a fair amount of tax in the UK.”
At the same time, the government has also announced measures to curb expats in the UK from other countries from claiming benefits, arguing only those paying into the system should gain a financial advantage from state welfare.