How the UK budget affects British expats

Alice Haine   |  March 25, 2012

With
the UK budget still fresh in our minds, we spoke to James
Thomas, the regional director of Acuma Wealth Management, to find out
how it affects you. Here are some of his thoughts:

Pensions

The
main area that affects expats relates to pensions, and specifically,
Qualifying Recognised Overseas Pensions Schemes (QROPS).
The so-called “condition 4″ amendments now form the
requirements that a QROPS has to meet to be considered an overseas
pension scheme. In essence, this requires that where relief in
respect of pension benefits is available to a non-resident member,
the same or substantially the same relief must also be available to a
resident member. The new rules will be implemented from April 5 2012.

Residency

The rules
relating to residency are being finalised and will form the Statutory
Residence Test. They will be introduced on April 6 2013, as part of
the Finance Bill 2013. The full details are still being finalised,
but there will be a checklist to assess how long you can stay in the
UK before you are liable to income tax.

Inheritance
Tax (IHT)

Finally,
the government will consult on legislation to increase the IHT-exempt
amount that a UK resident can transfer to their non-UK domiciled
spouse or civil partner. The Government similarly proposes to allow
individuals who are resident outside the UK, and have a UK resident
spouse, to elect to be treated as domiciled in the UK for the
purposes of IHT. This could potentially save a significant amount of
tax.

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