Was there anything in the recent UK budget that may affect non-residents?
Three matters are worthy of mention as follows;
CAPITAL GAINS TAX
Previously Non- residents were exempt from UK capital gains provided they remained non- UK resident for 5 complete UK tax years.
In 2013 Autumn Statement the Government announced that, from April 2015, non-residents who dispose of UK residential property will be subject to capital gains tax. This was confirmed in the March 2015 budget.
- From 6th April 2015 non-residents will pay capital gains tax on UK residential properties but only on gains accruing post 6th April 2015. An individual may obtain Professional valuations as at 5 April 2015 or time apportion the gain between the period of ownership to 5 April 2015 and from the 6 April 2015 to the date of sale.
- The private residence relief will only be available to a non-resident if they stay overnight at the property at least 90 times during the tax year.
- Non-residents will pay capital gains tax at same rates as UK residents (18% or 28%) and the annual CGT exemption (£11,100 in 2015/16) will be available. The 18% rate will be payable on some or all of the gain if the individual’s UK income is low enough to make him a basic rate tax payer. The 28% rate will be paid on any gains exceeding the higher-rate threshold
As from 6 April 2015 if you have a defined contribution pension scheme you are allowed to take a 25% tax free lump sum and the balance as and when you want the cash.
The balance will be subject to tax at the marginal tax rate. Previously, one could take a 25% tax free lump sum and the balance had to be used to buy an annuity. Also, from 6 April 2016 people who already have an annuity will be able to now effectively sell it on and instead of paying tax at 55% will only pay tax at the marginal rate of tax. We strongly advice you obtain advice from your Authorised Financial advisor before taking any action.
From the 6 April 2016 a tax free allowance of £1000 (or £500 for higher rate tax payers) will be introduced for interest earned on savings.
This does not help residents of Cyprus as in Cyprus special defence is payable at 30% or 3% if your total income is below €12,000.