The UK is planning to raise £350 million from expatriates. So, how will this affect you?
It’s bad news for British expats
For those not in the know, the UK is planning to raise £245 million (Dh1,486m) over four years from an estimated 350 high-earning non-domiciled residents who use dual contracts to avoid tax.
This is according to Her Majesty’s Revenue & Customs, which first revealed the news at the end of last year. Then, last week, details of the measure were revealed alongside chancellor of the exchequer George Osborne’s annual budget.
According to Bloomberg, this measure will target the practice of using separate employment contracts for work in Britain and abroad for the same or associated employers,
“In most cases, separate contracts will have been artificially arranged in order to obtain a tax advantage,” HMRC said. “The income caught by this measure will cease to be eligible for remittance-basis tax treatment.”
The amount expected to be collected by the measure will be £75m in 2015-16, £55m in both 2016-17 and 2017-18 and £60m in 2018-19, HMRC said.
If you think you are exempt from this ruling, then think again. The UK government has other plans to target expats.
According to the Telegraph, the UK government’s assault on the finances of British expats means that personal tax allowances for non-residents are also set to be reviewed.
Under current rules every UK taxpayer has an amount of income that can be earned before any tax is charged. This is currently £10,000 for a single person (rates differ according to a person’s age, marital status and other factors). However, while non-resident are currently eligible for this allowance, this could change.
Chancellor George Osborne said: "To ensure the UK personal allowance remains well targeted, the government intends to consult on whether and how the allowance could be restricted to UK residents and those living overseas who have strong economic connections in the UK, as is the case in many other countries, including most of the EU."
It means that expats that receive an income on UK property or a pension could be affected. While it’s too early to say what the outcome of this decision will be, it would be prudent for all UK expats to stay informed. We’ll keep you posted.