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Autumn Statement 2022: What it means for Expats and Non-Residents

The Autumn Statement was announced on November 17th, 2022 with some significant changes that will affect the tax and State Pensions of many British expats living abroad. This article highlights the key changes and provides an overview of how they will affect you as an expat

Written on 18 November 2022

On 17th November 2022, The Chancellor of the Exchequer, Jeremy Hunt, announced the forthcoming tax changes that face UK taxpayers, whether at home or abroad for the forthcoming tax year (2023/24) and beyond.

There has been plenty of commentary around who it works for and who it’s going to impact most, so we have sifted through the changes and information to bring you the key facts and we will work with our partners to identify what you can and will need to do to either mitigate or embrace the changes.

We will present everything across Experts for Expats, including interviews with our partners and content updates between now and April.

However, if you would like to get your tax planning for the next financial year underway, the best option is to speak to a trusted specialist as soon as possible, and you can do so by requesting a free introduction through our free UK tax introduction service.

Personal and dividend allowances

The key takeaway regarding the Personal Allowance, which is the income threshold at which tax is due, is that it will remain at £12,570 until April 2028.

For Directors of Limited Companies taking earnings as dividend, the dividend allowance has been reduced from £2,000 to £1,000 for the tax year 2023/24 and reduced to £500 for the tax year 2024/25. There was no announcement whether it will be abolished.

This means that if you use dividends to form part of your income, you will have to start paying tax after £1,000 from April 2023.

The rates at which you pay tax on dividends are unchanged, with the lower rate remaining at 8.75% from April 2022.

Income tax rate thresholds

The threshold of the higher rate of tax has now been frozen at £50,270 until 2028, which means you will pay the basic rate of tax (20% income tax rate) up to £50,270.

The big change is that the additional rate (45% income tax rate) threshold has been reduced from £150,000 to £125,140. This means that people who earn between £125,140 and £150,00 per year will now have that income taxed at 45% from April 2023.

New income tax rates from April 2023

 

Income thresholds

Tax rate on income

Personal allowance

£0 - £12,570

0%

Basic rate

£12,571 - £50,270

20%

Higher rate

£50,271 - £125,140

40%

Additional rate

£125,141+

45%

 

National insurance

All National Insurance rates and thresholds will stay the same, including the thresholds until 2028. All 3 employee thresholds remain unchanged for 2023/24, but only two, the primary threshold and the upper earnings limit, will remain fixed until April 2028.

Inheritance tax

Nil-rate Inheritance Tax and thresholds will stay the same until 2028 at least.

Capital gains tax

The Capital Gains Tax annual allowance, which is currently £12,300 will be reduced to £6,000 from April 2023 and will reduce to £3,000 in April 2024.

Non-Dom tax status

There are no planned changes to the Non-Dom tax status of foreign expats resident in the UK with overseas income.

Pensions

The UK State Pension will increase with inflation from 6 April 2023 (currently 10.1%), in line with the commitment to the triple lock. Per week, the full basic state pension will increase from £141.85 to £156.20, and the new state pension will increase from £185.15 to £203.85. These increases exclude UK pensioners resident in countries where the State Pension is frozen (which includes Australia, Canada and New Zealand).

There were no changes to the Tax Free Allowance of 25% on lump sum withdrawals from Personal Pensions. There were also no changes to the lifetime allowance (LTA) which remains frozen at £1,073,100 until at least April 2026.

GBP Exchange Rate

Unlike the now notorious Mini-Budget announced in September 2022, the affect on £GBP vs $USD has been negligible, while £GBP vs €Euro has actually strengthened by a small percentage. Therefore the impact has not been adverse, although £GBP is still relatively weak compared to its value at the beginning of 2022.

The long term affect of the Autumn Statement is yet to be felt, however, with the announcement that 2023 is likely to see the UK economy contract/shrink, any significant recovery is unlikely in the short term at least.

How these changes affect expats

For British expats living abroad, there are no fundamental changes to how you will be affected by UK tax or financial matters – what will be impacted is the rate at which you pay tax on both your UK income and any UK property or shares that you sell from April 2023.

The UK tax residents who will be mostly affected by these changes are the middle earners at the upper end of the basic tax bracket and shareholders of UK companies who draw income from dividends who have seen their allowance halved.

If you were planning to sell a UK property, you may also be affected by the significant reduction in the Capital Gains Tax allowance. This applies to all UK property owners, who are entitled to the annual exemption allowance, whether UK resident or not.

Get clarification on the Autumn Statement by talking to an expert

The information contained in this article is provided as a guide only and should not be relied upon to make decisions and you should always speak to a qualified professional before taking any action.

At Experts for Expats, if you would like to discuss your situation and how the Autumn Statement could affect you and explore options that could help mitigate changes, request an introduction to one of our trusted partners.

If you would like UK tax assistance, whether income tax, IHT or Capital Gains Tax, request a free introduction to a UK tax specialist who will provide you with a free 15-minute initial consultation during which information matters can be discussed.

If you would like to discuss your financial affairs, in more general terms, request an introduction to one of our trusted independent financial advisor partners who will also offer a free initial consultation and help you determine which actions may be suitable for you.

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