How the UK Budget Will Impact Expats

Offshoring assets will become more attractive.

Rachel Reeves announced tax increases in her recent budget.

Perhaps unsurprising when she wrote a book titled The Women Who Made Modern Economics, in which she praised Joan Robinson.

Joan Robinson praised the brutal communist leader Mao Zedong and the even more brutish North Korean regime in her book “Korean Miracle”.

Anyway, I digress.

Most of the tax changes announced will impact UK residents, including reductions in “salary sacrifices” that people can put into pensions.

However, some of the measures will also impact UK expats, who are a cohort I have been guiding for over a decade at adamfayed.com and beyond.

The main ones are

• UK expats will no longer be able to pay class two voluntary National Insurance contributions. Paying into the state pension will now cost five times more.
• If you own UK assets including property, you will pay 2% more on dividends and savings on UK-sourced assets
• A “mansion tax” on houses above two million pounds. For properties worth more than £2m, this will equate to £2,500 a year, rising to £7,500 for properties worth more than £5m.

What impact will this have?

Likely it will be another incentive for UK expats living overseas to offshore assets, because it comes after inheritance tax changes I mentioned on the video below.

Those changes were favorable to UK expats who stay abroad for over ten years and have non-UK assets upon death.

They are less favorable to those with UK assets above the inheritance tax threshold.

What does this all mean? In blunt terms, it means if you continue to leave assets in the UK you will be taxed more when you are living and when you die.

In comparison, if you stay outside the UK for over a decade and offshore your assets, you will pay less tax, including when you are gone.