#AceFinanceNews – BRITAIN – September 22 – Expats who rent out their homes in Britain will be stripped of the right to use the personal allowance, under a tax raid prepared by George Osborne Telegraph finance reported back in August.
Britons could be forced to return from retirements overseas if the Chancellor presses ahead with plans to force non-residents to pay tax on all their UK income, accountants warned.
Retired people drawing a Government pension are also likely to be hit by the proposals, which could cut a couple’s income by up to £4,000 a year.
At present, EU nationals and British expats are entitled to offset income earned in the UK against the £10,000 personal allowance.
Mr Osborne first indicated his desire to curtail the allowance in the March budget.
Under Treasury proposals released for consultation, the allowance would be restricted to people with a “strong economic connection” to Britain, bringing the tax regime into line with the US, Canada and much of the EU.
The move could affect up to 400,000 people and raise the exchequer an extra £400 million a year.It would include 175,000 people who live abroad and earn an income from property in Britain.
Many of the 1.2 million British retired people living overseas will not pay extra tax on their pension because they are either UK residents for tax purposes, as they spend half the year in Britain, or because most state or private pensioners are only taxable in the country of residence.
However, UK government pensions are only taxable in Britain, meaning that unless the Treasury introduces exceptions, former civil servants, NHS workers and council officials living overseas will pay more tax.
British diplomats and missionaries who are currently entitled to the personal allowance may also be hit by the tax changes, the Treasury consultation says.
While some expats will be able to claim tax relief from their country of residence, those living in low-tax jurisdictions – such as Hong Kong and Dubai – will pay more tax overall.
Jackie Hall, a tax partner at accountants Baker Tilly, said expatriates should consider selling their UK rental properties and reinvesting the money in shares or property abroad.
Some Britons may be forced to abandon a carefully-planned retirement overseas and return to Britain if the tax changes mean they no longer have enough to live on, she warned.
“Our pensioners who have gone abroad are going to suffer the biggest impact,” she said.
“If you have already jumped ship and are reasonably comfortable, this could turn the tide against you.
Those people may begin to struggle because they haven’t got the income in retirement that they thought they had.”
The Treasury said no decision has yet been made.
KEY FINDINGS –
Overall Size – A significant fraction of global private financial wealth — by our estimates, at least $21 to $32 trillion as of 2010 — has been invested virtually tax-free through the world’s still expanding black hole of more than 80 “offshore” secrecy jurisdictions. We believe this range to be conservative, for reasons discussed below.Remember: this is just financial wealth. A big share of the real estate, yachts,racehorses, gold bricks — and many other things that count as non-financial wealth are also owned via offshore structures where it is impossible to identify the owners.These are outside the scope of this report.
On this scale, this “offshore economy” is large enough to have a major impact on estimates of inequality of wealth and income; on estimates of national income and debt ratios; and – most importantly – to have very significant negative impacts on the domestic tax bases of key “source” countries (that is, countries that have seen net unrecorded private capital outflows over time
A simple question most people would say, but look at the reality of what it really means and it is not such a simple question after all!
The problem is simply what is tax evasion and what is tax avoidance and in this world of global financial contracts, the two blur into one. As and having worked in this country and offshore with my own offshore company and account, l personally do not see any reason to avoid paying tax!
As any accountant l employed had the job of mitigating my tax bill in favour of saving me money and allowing me to pay only what l really should owe! This is legitimate tax avoidance and is completely allowable!
Then we come to avoiding taxation by paying nothing at all and setting up offshore tax structures in such a way as to legitimise all tax avoidance! Whereby you have all the perks of claiming in the country of residency, but also can arrange to domicile yourself,by certain tax avoidance schemes and not paying anything!
So we have two different scenarios and the reason is tax avoidance!
So what of governments and revenue services where do they hold their funds? Well many of them have tax havens and massive property portfolios that are utilised for raising massive amounts of capital for investment purposes and make even more money, to totally avoid tax at all!
Remember anyone can use legitimate means transfer money to another account offshore without paying tax! The problem is getting that money back into the country and not paying tax!
This is where tax avoidance becomes tax evasion in many cases!
- Jeff Salway: Disabled are easier target for Tories than tax avoiders (scotsman.com)
- Wordconomic 4: Tax Avoidance (not Tax Evasion) (selionmanagement.wordpress.com)
- How We Morally Justify Tax Avoidance (acefinance.me)
- $21 trillion hidden offshore (bankrate.com)
- Romney’s Panama Misadventures Open Our Eyes to Offshore Tax Evasion – The Daily Beast (tribuneofthepeople.com)
- Fact File: Tax Avoidance (independent.co.uk)
- Why we should beware of plans to ‘name and shame’ tax avoiders (blogs.telegraph.co.uk)
The Government is to give people in England the legal right to pay annual council tax bills in 12, rather than the current 10, monthly instalments. The change would mean the expense is spread over the entire year, with the government saying it wants to “help people with their cost of living“. Ministers also want councils to use more electronic billing. In addition, the government has also confirmed that up to 300,000 families in England could benefit from plans to scrap separate council tax charges for occupied annexes. Currently only people over the age of 65, in so-called “granny flats”, are exempt from payments.
So what is your view on this government proposal?
- Fears over low-pay families as council tax benefit cut (yorkshirepost.co.uk)
- Government could introduce ‘Granny flat’ tax break (independent.co.uk)
- Massive rise in council tax arrears (guardian.co.uk)