Chancellor Philip Hammond delivered his first Autumn
Statement on 23rd November.
It was the first budget after the Brexit vote but does not provide many
clues as to what a post-EU world will look like and there were no reactionary
tax reforms. There were, in fact, few
significant changes which will affect expatriates.
One interesting change going forward is that this will be
the last "Autumn Statement". The 2017 Spring
Budget will also be the last spring one.
After that the Chancellor intends to deliver a single budget every
autumn. This should mean there are less
tax changes in a year, and that they are announced well in advance of the new
tax year. Finance Bills will be released
after the autumn budget.
In the wake of Brexit, the Office for Budget Responsibility
has revised the UK's growth projection down from 2.2% to 1.4% for 2017 and from
2.1% to 1.7% for 2018. 2019 and 2020
remain unchanged at 2.1%.
Mr Hammond noted that the economy had shown strength and
resilience following the vote, but said that uncertainty over the exit process
is expected to have a significant impact.
To boost productivity he unveiled a £23bn National
Productivity Fund to support house building, science and innovation, transport
and congestion, and fibre broadband and 5G connections.
The personal allowance will be £11,500 for the 2017/18 tax
year, rising to £12,500 by the end of this parliament. In the 2020s it will automatically increase
in line with inflation.
The higher income tax threshold will be £45,000 in 2017/18,
rising to £50,000 by the end of parliament.
The ISA limit increases from £15,200 to £20,000 in April
2017. Remember, ISAs are not tax free
in Spain. Once you have
ceased to be UK tax resident, you can no longer add to these investments.
Changes were announced in respect of the
tax treatment of foreign pensions. The
UK will extend its "taxing rights over recently emigrated non-UK residents'
foreign lump sum payments from funds that have had UK tax relief". This limited statement is not very clear,
and we should know more once the Finance Bill has been released, but it appears
that, if you have a Qualifying Recognised Overseas Pension Scheme (QROPS), you
will need to submit UK tax returns for payments for 10 years instead of the
current five. If you are resident in Spain,
under the double tax treaty with the UK taxing rights fall to your country of
residence, so you will not pay more tax.
For UK residents, the tax treatment of
foreign pensions will be more closely aligned with domestic pensions. This probably means the 10% discount on
foreign pension income for UK income tax purposes will be lost.
The Money Purchase Annual Allowance will be
reduced from £10,000 to £4,000 in April 2017.
This is the amount of tax-relieved pension contributions you can make if
you have already accessed a pension flexibly.
The pension ‘triple lock', whereby the
state pension rises annually by the highest of inflation, earnings growth or
2.5%, will remain in place for the rest of this parliament. But the Chancellor hinted it may then be
scrapped, saying the government will need to tackle the challenges of rising
longevity and fiscal sustainability.
All UK residential property will be exposed
to UK inheritance tax from 6th April 2017, regardless of the
structure it is held in.
The Annual Tax on Enveloped Dwellings
charges will rise in line with inflation.
The new 15 out of 20 year rule will apply
from 6th April 2017. This means that non-UK
domiciles living in the UK will become deemed UK domiciled two years faster
than at present, exposing their worldwide assets, income and gains to UK
From the limited information published with
the Autumn Statement, it appears that the government has decided not to change
the 5% tax-deferred allowance available on offshore bonds.
UK resident individuals facing a
disproportionate tax charge will be able to apply to HM Revenue & Customs
to have this tax charge recalculated on a ‘just and reasonable' basis. This
will apply from April 2017.
HMRC will be consulting on a new legal
requirement for intermediaries, such as tax advisers and fiduciaries who arrange
overseas structures for clients, to notify HMRC regarding such structures. This would include overseas trusts and
companies. This marks a new step forward as, until now, HMRC has only been able
to be reactionary, not proactive.
More detail on these reforms will be
included in the draft Finance Bill in December.
If you think you could be affected by any of these measures, seek
personalised advice from a professional who can guide you on both UK and Spanish
tax and the interaction between the two regimes.
Partner, Blevins Franks
Tel: 952 809 212
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Tax rates, scope and reliefs may change.
Any statements concerning taxation are based upon our understanding of
current taxation laws and practices which are subject to change. Tax information has been summarised; an
individual is advised to seek personalised advice.