Even if you are resident in Portugal, British expatriates need to keep up to date with UK taxation as it may continue to affect you. Here is a summary of some of the key points of the December Autumn Statement.
If you own property in the UK, then the capital gains tax charge on residential property owned by non-residents will be of particular interest.
The government confirmed that the rate applicable will be 18% or 28% for individuals, 28% for trustees and 20% for companies, and that the annual exemption will be available to individuals and trustees (£11,000 and £5,500 respectively from 6th April). Only gains arising from 6th April 2015 will be taxed. You can rebase the value of your property to the value as at that date, or opt for the gain to be time-apportioned, or the whole gain to be taxed.
You can only elect to use the Private Residence Relief if you spend at least 90 days in your UK property that year. This may impact your residence position so be careful.
If you buy a UK property, the stamp duty charge rules changed from midnight on 3rd December 2014. Under the new system, you will only pay the rate of tax on the part of the property price within each tax band, in a similar manner to income tax.
The UK pension reforms are a key issue for British expatriates. We had been expecting the Chancellor to provide some clarity on the position of Qualifying Recognised Overseas Pension Schemes (QROPS), but none was forthcoming.
There was news on annuities though. The 55% death tax charge will be removed from 6th April 2015, to bring them in line with income drawdown plans. From April, if you are aged 75 or over when you die, your beneficiaries will pay tax on the amount received at their marginal rate of income tax.
Another proposed UK change we have been waiting for news on is the removal of the personal allowance from non-UK residents.
The Autumn Statement confirmed that the allowance will increase from £10,000 to £10,600 from 6th April 2015. However with regards non-residents’ entitlement, no decisions have been reached yet. The government still believes that there is a “strong rationale” for removing the allowance from non-residents, but acknowledged it is a complex change for those affected. Consultation will continue on this matter.
With regards inheritance tax, the government had previously announced plans to make just one nil rate band available for all trusts settled by an individual. This has now been dropped, though it intends to curtail the setting up of trusts on different days to obtain nil rate bands for each trust, and to introduce new rules on trust calculation. New rules will be announced next year.
Seek personalised advice on how these changes affect you, and how they interact with Portuguese taxation. I would be happy to answer any questions you may have.
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.
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