In the March 2014 budget the British Chancellor questioned whether British expats should be exempt from benefiting for the UK’s personal income tax allowance. At present every UK taxpayer has a personal allowance, which is the amount of income that can be earned before tax needs to be paid. For 2014/2015 this is set at £10,000 per person for the tax year.
Currently all non-resident individuals who have UK income are entitled to claim the personal allowance. However, the Government announced in its 2014 budget that it would be releasing a consultation aimed at restricting this allowance. This would have affected a large number of expats in particular where UK firms send employees to work abroad for a period of time or pensioners who have retired abroad, but still have an income from the UK.
The Government defended this move stating that the majority of expats who would be subject to increased tax liabilities will be able to claim tax relief in their home state so will not have any additional tax burden.
However, expats were encouraged to take part in the consultation which concluded on the 9th October 2014 and it has now been announced that the government will not be proceeding to deprive non-residents of their personal allowance.
This allowance currently safe, but there is still the threat of change and it is possible that a more detailed consultation will be released in the future. For now though no change will come into effect before April 2017.
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