UK FINANCIAL BOMBSHELL MAY HIT BRITISH EXPATS

Hundreds of thousands of British non-residents could lose their tax-free allowance on UK earnings under proposals being considered by the British government. The total includes all British nationals in Thailand who fill in a UK tax form, including the many pensioners who are living here on a fixed income.

Britain’s Chancellor George Osborne wants your cash

The tax-free allowance is currently 10,000 pounds a year, due to rise to 10,500 pounds next year. If the personal allowance is withdrawn for non-residents without exception, then all individuals would be 2,000 pounds (100,000 baht) worse off annually, or 4,000 pounds for married couples. They would begin paying tax of 20 percent from the first pound of income, and 40 percent on income of 31,000 pounds or more. Presently, the government has not made a final decision on the proposals put forward by British Chancellor of the Exchequer George Osborne.

The consultation document claims that few countries in the world have as generous an allowance for expats as Britain and that the granting of this privilege should perhaps be restricted to those who spend at least six months a year in the UK. The plan could mean the UK getting more tax from 400,000 non-residents worldwide, including around 25,000 based in Thailand. The total sum which could be saved by the government is in the region of 400 million pounds.

The biggest group likely to be affected in Thailand is the large number of retired men and women who are in receipt of UK government pensions, occupational and/or state, including former teachers, health workers, civil servants and council officials. These pensions are taxable in UK, not in the country of residence, so these individuals will bear the brunt of any extra tax without being able to relieve it elsewhere. Those who rely for their income on renting out property in the UK will also be included in the proposals if they are adopted.

Jason Porter, who specializes in expat tax affairs, said “The proposals are still out for consultation, so any changes won’t take effect until the start of the 2015 tax year, or more likely 2016.” He added that it appeared to be Treasury policy to enact measures which increase the tax burden for expats. Financial advisers are stressing that the current proposals are very much more serious for expat pensioners than the government’s refusal to increase the old age pension in line with inflation.

The full consultation document is available at www.gov.uk/government/consultations.

Pin It on Pinterest