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UK 2016 Budget blows warm and cold for Brit expats overseas
| Published: | 18 Mar at 6 PM |
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UK expats living overseas received a mix of good and bad financial news when the UK’s 2916 budget was unveiled.
The dark clouds hanging over the world economy precluded much in the way of free lunches for any sectors of the UK population wherever they live, but at least the feared spectre of restricting expats’ personal allowances wasn’t hovering in the small print. The threat was first made in 2014, with pre-budget rumours abounding over its introduction in 2016.
In fact, personal allowances for all British citizens rose more or less as expected, from £11,000 in 2016/17 to £11,500 in 2017/18. Unless next year’s budget speech changes everything due to a Yes Brexit vote, at least expats have a small reason to celebrate. For UK citizens working overseas and renting out British properties, there’s another perk in the form of a rise in the higher rate tax band threshold by £2,000, due to come into force in the 2017/2018 tax year. Some expatriates holding UK occupational pensions as well as the state pension might also benefit from the increase.
Surprisingly, capital gains tax rates were slashed. The basic rate fell from 18 to 10 per cent and the higher rate dived to 20 per cent from 28 per cent. Although most expats living overseas may not reap any benefits, those working abroad who still have a house in the UK may win out, unless the property qualifies for other related residence reliefs.
Basically, for citizens resident in the UK, tax paid on gains from the sale of residential property above a certain value are excluded from the capital gains rate cuts and will be charged at the old rates. However, the, as yet unchanged, main residence relief and other related reliefs may still be applicable for expats working overseas and wishing to sell their UK home.
Expats barred from adding funds to an ISA once they have left the UK will now be able to claw back some benefit from the budget’s increase in the actual individual savings allowance. From April next year, the limit will rise from £15,240 to £20,000.
The dark clouds hanging over the world economy precluded much in the way of free lunches for any sectors of the UK population wherever they live, but at least the feared spectre of restricting expats’ personal allowances wasn’t hovering in the small print. The threat was first made in 2014, with pre-budget rumours abounding over its introduction in 2016.
In fact, personal allowances for all British citizens rose more or less as expected, from £11,000 in 2016/17 to £11,500 in 2017/18. Unless next year’s budget speech changes everything due to a Yes Brexit vote, at least expats have a small reason to celebrate. For UK citizens working overseas and renting out British properties, there’s another perk in the form of a rise in the higher rate tax band threshold by £2,000, due to come into force in the 2017/2018 tax year. Some expatriates holding UK occupational pensions as well as the state pension might also benefit from the increase.
Surprisingly, capital gains tax rates were slashed. The basic rate fell from 18 to 10 per cent and the higher rate dived to 20 per cent from 28 per cent. Although most expats living overseas may not reap any benefits, those working abroad who still have a house in the UK may win out, unless the property qualifies for other related residence reliefs.
Basically, for citizens resident in the UK, tax paid on gains from the sale of residential property above a certain value are excluded from the capital gains rate cuts and will be charged at the old rates. However, the, as yet unchanged, main residence relief and other related reliefs may still be applicable for expats working overseas and wishing to sell their UK home.
Expats barred from adding funds to an ISA once they have left the UK will now be able to claw back some benefit from the budget’s increase in the actual individual savings allowance. From April next year, the limit will rise from £15,240 to £20,000.
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