By Peter Worthington, Senior Partner,
The UK Chancellor of the Exchequer, George Osborne, delivered his Autumn Statement on 3rd December. There were a few announcements which may affect expatriates, depending on your circumstances.
Personal tax allowance
The personal allowance will increase from £10,000 to £10,600 from 6th April 2015.
The Government still believes there is a ‘strong rationale’ for removing it for non-UK residents, but that this is a ‘complex change’ for those affected. Consultation will continue on this matter.
Capital gains tax charge for non-UK residents
The Government released a document to explain how this charge on gains arising on disposal of residential properties will work. In summary:
■ Gains arising before 6th April 2015 will not be taxed. Individuals can rebase the value of their property to the value as at that date, or opt for the gain to be time-apportioned, or the whole gain to be taxed.
■ The Annual Exemption will be available to individuals (£11,000 from April 2015) and trustees (£5,500).
■ The rate applicable will be 18% or 28% for individuals, 28% for trustees and 20% for companies.
■ Losses can be offset on gains on other UK residential properties, and carried forward to set against similar gains if unutilised in the current year.
■ Private Residence Relief (PRR) elections can only be made if the non-UK resident spends at least 90 days in their UK properties during the relevant year. This may have an impact on their UK residence position, so consider this carefully and take advice.
UK residents owning overseas property can also now only make an election for PPR if they spend more than 90 days in their properties in that jurisdiction that year.
From 6th April 2015, the ISA (or NISA) threshold will increase from £15,000 to £15,240. Note that while non-UK residents may hold ISAs, they cannot add to them.
From 3rd December 2014, ISA holders will be able to pass on their ISA benefits to their spouse/civil partner on death, via an additional ISA allowance usable from April 2015. The value then becomes liable to income tax.
For annuities providing ‘death benefits,’ the 55% tax charge on death is abolished. This brings annuities into line with income drawdown plans, which will see the so-called ‘death tax’ removed from next April. It will only apply where the payment occurs after 6th April 2015. If the person who dies is 75 or over, beneficiaries will have to pay tax on the amount received at their marginal rate of income tax. This levels the playing field between pensions and annuities. The changes do not affect people in final salary pensions.
There is still no clarity on the position of Qualifying Recognised Overseas Pension Schemes (QROPS).
The ‘slab system’ which operated under the old rules in respect of the stamp duty charge on property purchase has been abolished from midnight 3rd December 2014.
The new system means that buyers will only pay the rate of tax on the part of the property price within each tax band – like income tax.
If any of these changes may affect you, seek specialist advice relating to your personal circumstances. Remember you need to take the tax rules of both the UK and Spain into account to determine the best solution for you.
Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual is advised to seek personalised advice.
To keep in touch with the latest developments in the offshore world, check out the latest news on our website www.blevinsfranks.com.