Property market
Expats hoping to invest or buy in British property will be delighted to hear Sunak’s announcement that the Stamp Duty holiday will be extended. The Chancellor announced the expected extension of the Stamp Duty holiday until September 30th.
More specifically, properties worth up to ₤500,000 will be exempted from stamp duty from the end of March until the end of June. After that, there will still be no duty on homes worth up to ₤250,000 for a further three months.
Sunak also announced the creation of a new mortgage guarantee scheme. The scheme aims to stimulate lenders to lend mortgages up to 95% and help people who can’t afford a deposit to enter the property market. The Chancellor noted thanks to the new scheme, the “Generation Rent” will turn into “Generation Buy.”
Taxation
The thresholds for personal income tax will continue to be frozen from 2022 to 2026 at ₤12,570 for the basic rate and ₤50,270 for the higher rate. Corporate tax is set to increase to 25% in April 2023. However, the Chancellor indicated companies with profits of less than ₤ 50,000 will still pay 19%.
Thresholds for inheritance tax, pensions, lifetime allowance and capital gains tax thresholds will remain frozen. Even with an inheritance tax review, the threshold remains frozen at ₤ 325,000 per person (as it has been since 2009).
The residential nil rate band increases as planned from ₤150,000 to ₤175,000 per person. When passing on a main UK home to direct descendants but starts to taper once joint assets exceed ₤2 million, this provides extra tax relief.
The good news for expats is that overseas property can qualify, provided it is your main home (local inheritance taxes may still apply).
Implementation of a “super deduction” scheme will allow firms to invest in equipment to receive tax breaks from the government.
The extension of the temporary reduced VAT rate for hospitality and tourism will also be extended to the end of September.
Alcohol and fuel duties remain on hold.
Pensions
Pension relief
Although the personal tax-free pensions allowance remains at ₤40,000, there will be more scope for higher earners to receive tax relief.
Currently, those earning over ₤ 110,000 are subject to a “tapered” allowance, but this threshold rises to ₤200,000 from 6 April 2020. Soon, only those earning an “adjusted income” of at least ₤ 240,000 (including salary, dividends, rental income, interest and pension accrual) are set to lose tax relief in the 2020/21 tax year (versus ₤ 150,000 today).
However, the minimum level to which the annual allowance can shrink will reduce from ₤10,000 to ₤4,000. This will only affect those with total taxable income over ₤300,000.
Lifetime allowance (LTA)
The Chancellor said the LTA would remain at its current level of £1,073,100 for 2020/21 rather than increasing in line with inflation. It had been expected to rise by £5,800 in 2021/22, in line with 0.5% Consumer Prices Index.
UK State Pension
The National Living Wage increase (from ₤ 8.21 to ₤ 8.72) helps increase the State Pension.
Under the government’s “triple lock” commitment, the State Pension currently increases by whichever is the highest of inflation, 2.5%, or– as is the case this year– average earnings. This means those on the older State Pension will see a 3.9% rise, from ₤129.20 to ₤134.25 per week (₤ 262.60 extra a year).
While this includes UK retirees living in the EU, you will need to be lawfully resident in your chosen country before the end of 2020 to continue receiving cost-of-living increases beyond Brexit. The Budget also confirmed the Department of Work and Pensions will backdate ₤3 billion in State Pension underpayments to women over the next few years.
QROPS transfers
There were no changes to transfers to EU/EEA-based Qualifying Recognised Overseas Pension Schemes (QROPS), which remain tax-free for EU residents.
However, the UK’s 25% ‘overseas transfer charge’ remains for non-EU/EEA transfers. This may be extended once the Brexit transition period ends in December 2020, so take regulated advice to explore your options under current rules.
