British expats right to vote could come with a ‘sting in the tail’ in the form of serious tax liabilities.
AS reported in London Loves Business this week, the British Government is planning on allowing more British expats the right to vote in UK elections, however, leading tax advisory Blick Rothenberg warns that this could come with a “sting in the tail.”
The government confirmed in March’s budget that British expats living abroad and who are not residents in the UK for tax purposes would be entitled to vote on an “indefinite basis” in future UK elections.
This is in contrast to rule in 2002 when only non-residents who have lived overseas for 15 years or less still had the right to vote.
A tax director at the firm, Robert Salter, said: “British expats overseas should consider carefully whether they wish to take advantage of this extended franchise because it could cause problems in the future and mean that they are liable for UK taxes and in particular inheritance tax.
“This is particularly the case for wealthier expats, who may have moved abroad to minimise their exposure to UK taxes.”
Robert added: “Anybody who is UK domiciled in accordance with our common law, will – on death – be subject to UK Inheritance Tax on their worldwide assets. Whilst the issue of one’s domicile is complex and will depend on countless factors, and is not directly related to issues such as nationality.)
“It can be very difficult to break one’s domicile of origin (eg if one is born in the UK of UK parents). Even when one has lived overseas for many years, ongoing links to the UK (such as remaining registered to vote in the UK), may be a sign that one has retained a UK domicile and hence remain liable to UK IHT on death.
“Whilst this won’t be a problem for many expats, because they have quite limited assets and wouldn’t be liable to IHT regardless of their domicile status or because they may legitimately retain deep links to the UK and have, for example, a clear intention of retiring here in due course. For others, it could make a major difference to the funds that they are able to pass on to their children and grandchildren.”