Posted on: 13-03-2020 in UK
As we move into the third month of a new decade, the topic top-of-mind for most British expats is the current spread of the Coronavirus disease worldwide. It has been announced that £5 billion will be allocated for an NHS emergency response fund to tackle the crisis across the UK. While this disease has somewhat overshadowed the UK Budget 2020 announcement, there are a few important areas of interest for expats which we will highlight today.
One major announcement for British expats is a new tax surcharge on properties that was first mentioned in the budget of 2018.
Non-UK residents will have to pay a Stamp Duty Land Tax (SDLT) surcharge of 2 percentage points on residential property purchased in England and Northern Ireland from the 1st April 2021. This new charge will be added to the 3 percentage point duty already paid on buy-to-let properties and second homes.
The reasoning behind this new charge is to tackle homelessness and the housing shortages plaguing the UK. The conservative approach has been to penalise foreign investors making use of the UK as a place to invest in empty luxury property. Expats who aim to rent out their homes for pension funds, however, have clearly not been considered. Ultimately, the new tax is expected to net the government £120 million.
For British expats looking to sell up in the UK, there was an increase in the Capital Gains tax allowance to £12,300. Overall, this isn’t a huge change. Alongside this, it was announced that the time to pay the tax after the sale of a property will be reduced to 30 days after the sale has been processed.
Alongside this, there was an announcement of a new reduction in the Entrepreneurs’ Relief lifetime limit. The government will introduce legislation in Finance Bill 2020 which will reduce the lifetime limit on gains eligible for Entrepreneurs’ Relief from £10 million to £1 million for qualifying disposals made on or after 11 March 2020. Specific rules will apply where contracts were exchanged before 11 March but not completed until after that date.
When it comes to income tax, not much has really changed for those British Expats who are domiciled for tax in the UK.
The income threshold that reduces the amount high earners can contribute to a pension is set to rise from £150,000 to £240,000. For high earning British expats, this is fantastic news.
If they earn their salary from a UK company and have an income of under £240,000, they will no longer have to suffer through the controversial tapered annual pension allowance. Those earning above £200,000 will still have the amount they can save into a pension reduced on a tapering scale, but for those under this amount it’s a time for celebration.
If you want to learn more about the UK budget 2020 and discover how it might affect you as an expat, please contact Holborn Assets today and speak to one of our helpful team.
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