Chancellor George Osborne has proposed removing expats’ personal tax allowances. If the move goes ahead, it may mean many thousands of British citizens living abroad will have to change the way they handle their tax affairs according to a report in the Telegraph
In the article it estimates that around 175,000 people who live overseas and who also gain income as a landlord by renting their UK property could be affected by what it describes as a ‘tax raid’.
Removing the personal tax allowance could mean an expat couple are up to £4,000 worse off each year. However the report goes on to state that those British overseas landlords with a “strong economic connection” with the UK would be able to continue benefitting from the allowance, which presently stands at £10,000.
It is not yet clear how the government would identify a person or persons with “strong economic ties” to Britain. However in the article Dean Power, assistant technical coordinator at The Fry Group is reported to have said that a possible method would be “a straight percentage test to assess where most of their income arises”. Mr Power also commented that “This proposal from the Chancellor also emphasises the importance of deducting all possible allowable expenditure against rental income.” So those landlords who do derive an income from their rental properties should seek professional tax advice to ensure that they offset all expenses like landlord insurance against their rental income.
Many expat landlords will no doubt be concerned about the proposals. However it would appear that the proposed changes are still in the consultation stages ( gov.uk/government/consultations ) and that the Treasury has yet to make a decision. So any proposed changes are likely to take some time to come into effect.
Those planning on retiring overseas or moving abroad for work and renting their properties will need to ensure that their landlord property insurer can provide cover on their rental property whilst they are domiciled outside of the UK. This can depend on the country in which the landlord will be residing in.
Click4quote.com can offer landlord insurance quotes to UK passport holders registered in the UK for tax purposes who live either permanently or temporarily in the EU and certain other countries. Why not give us a call for a quote today and see if we can help protect your UK property investment