With the UK budget still fresh in our minds, we spoke to James Thomas, the regional director of Acuma Wealth Management, to find out how it affects you. Here are some of his thoughts:
The main area that affects expats relates to pensions, and specifically, Qualifying Recognised Overseas Pensions Schemes (QROPS). The so-called "condition 4" amendments now form the requirements that a QROPS has to meet to be considered an overseas pension scheme. In essence, this requires that where relief in respect of pension benefits is available to a non-resident member, the same or substantially the same relief must also be available to a resident member. The new rules will be implemented from April 5 2012.
The rules relating to residency are being finalised and will form the Statutory Residence Test. They will be introduced on April 6 2013, as part of the Finance Bill 2013. The full details are still being finalised, but there will be a checklist to assess how long you can stay in the UK before you are liable to income tax.
Inheritance Tax (IHT)
Finally, the government will consult on legislation to increase the IHT-exempt amount that a UK resident can transfer to their non-UK domiciled spouse or civil partner. The Government similarly proposes to allow individuals who are resident outside the UK, and have a UK resident spouse, to elect to be treated as domiciled in the UK for the purposes of IHT. This could potentially save a significant amount of tax.
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