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Hello i have a problem well not me but what i class a friend/relative. He is living in Australia, but draws an income from the UK in sterling and changes it into dollars and spends it. Its not alot but he resides with family so pays no rent. His income this year derived from the UK is just under the personal allowance and 10% savings tax allowance. As his only world wide income is from savings interest he benefits from the 10% savings tax. Now last year he received all his interest free of UK tax as it in total the interest received was below the UK taxable allowance. So at the end of last years tax year 4th April 2014, his total income was below the allowance. He benefits from the fact that all UK citizens currently living overseas has the opportunity to utilise their personal allowance. Also this is declared to the ATO, as at current exchange rates throughout the previous year his income was below the taxable allowance here in Australia, so he did not have to pay any tax here in Australia either. Now i have come across a statement made in this year’s budget by the UK government, that they are consulting in removing the access to the UK personal allowance by all citizens living overseas, with an emphasis on Australia. Now this could affect him by a large amount as this current year the personal allowance is worth in sterling 2287 pounds so in Australian dollars at roughly 1.8 that’s $4116.00 nearly $80 bucks a week over here which will severely dent his income. Now i know he is fine the 2013/2014 tax year, that is gone. But would this affect him this year we are in the 2014/2015 tax year, or will it start if it does start at the beginning of the 2015/2016 tax year. I ask because if it could affect his this current tax year he needs to start putting aside $80 bucks a week if the UK government decide to introduce it from the 5th April 2014. Whereas if the consulting process starts now and it comes into effect at the beginning of 2015, well he will have to change the way he receives his interest next tax year. There are a couple of links below which i found relating to this situation, one is from Alan Collett who i have seen on here. Any feedback or thoughts much appreciated.
I was going to contact Alan by message but i thought i would share this with the forum just in case it affects anyone else?

http://www.gmtax.com.au/news/

http://www.telegraph.co.uk/finance/p...ensioners.html

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Sorry old sparkles

Found this, seems it will not be implemented at the earliest until April 5th 2015. Expats currently this year 2014/2015 UK tax year are enjoying/receiving their UK personal allowance (£10,000), .i.e receiving their personal allowance, so it will not be removed or clawed back while in use etc, .i.e this year because it has been approved for the coming year. BUT. What could or will happen is it will be implemented from April 5th 2015. So any income derived from savings now, currently are safe and come under the umbrella of the UK personal allowance. But next financial year is a different banana.

http://chrisballblog.com/

Personal allowances

Another key point to note and to look at is that it was suggested that no personal allowances will be eligible for UK expatriates from April 2015 too. This will have an extremely damaging effect for anyone receiving any income or making any gains.

Personal allowances as we are all aware are your tax free amounts that you receive every year. For the 2014-2015 tax year, this amount is now £10,000.
If they scrap the personal allowances this can have a very detrimental effect to the two most likely individuals to receive income from a UK source – landlords and pensioners.

Let’s first look at landlords. Under the current scheme landlords have to make a profit on their property per year of over £10,000. The rent they receive less any interest from mortgage payments, capital allowances, insurances and other tax deductible items are then taken off.

Normally someone has to own a few properties for there to actually be any tax charge due.

However, once the personal allowance is removed – thousands more expatriates who previously avoided any UK income tax on their properties will now be susceptible to UK income tax. Any expatriate that makes any real money on their property will become applicable to UK income tax.

The second type of individuals who will be negatively impacted by this are pensioners. Anyone receiving his or her state pension or any other type of private pension from the UK could be nearly £4,000 worse off (if they are a higher rate tax payer).

A lot of countries do not also have double tax arrangements with the UK regarding pension provisions. This means that the full pension will be taxed in the UK with your marginal rate of tax applicable and then taxed again in the country you are looking to reside in!

Double taxation with no type of relief – in either country! Now potentially without a personal allowance in the UK too.

The UK tax system is looking increasingly bleak for Non-UK residents. As a result of this budget we have seen huge numbers of individuals turn to us and ask about various overseas jurisdictions – with regards to their pensions and also their savings too.

If you would like to discuss the impact of the budget on your financial circumstances in more detail then please either call Emily or myself for a review meeting.

Bermudashorts

Seeing as you post in Australia, I will retort from an expat in Australian point of view.

I have been a landlord and indeed have not paid any tax in UK due to it being under personal allowance. Accordingly I pay tax in Australia on that income instead. If my UK personal allowance was removed then I would pay tax in UK and then I would put this on my Australian tax return as a credit and pay less tax there.

So it makes no difference and I am puzzled as to what point you are using to make your what seems like a post designed to shock?

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He pays no tax here in Oz so cannot offset his losses in the Uk against tax not required to pay here in Oz. So no not shock for a tax payer here in Oz but a shock for a retired person or mentally disabled person with no Oz income just UK sourced income yes a big shock.

spouse of scouse

Erm, who's Emily and what's a 'review meeting'? Just asking

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Lol heaven knows just in the link script lol.

spouse of scouse

Ah, gotcha. Thanks

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You did. Lol. Sure Emily is lovely whoever she is.

spouse of scouse

Just as well her phone number wasn't on there, she could be getting some strange calls

Bermudashorts

If someone were making loses then they should be looking at their business model, not worrying about offsetting losses. Better to make a profit and pay tax than make losses and offset them! A fact sometimes seems lost on some people.

But to the example, if someone were making losses in UK and had no Australian income then how would they be offsetting the losses anyway? It is irrelevant whether there is a UK personal allowance or not in this situation.

If making profits, as I explained tax would be paid either here or there anyway.

I really fail to see what point you are making, perhaps you really don't understand yourself because this is nonsensical.

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Jeez...losses by meaning he will lose his personal allowance that is a financial loss to him. He cannot offset that tax paid in the UK to tax not required to pay here in Oz. Unlike yourself

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Please read the original post. Its explained in a simple way for anyone to understand ...

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He currently pays no tax in the UK Or Oz. He has no income here in Oz. He has only income derived fron interest fron a UK savings account. He currently benefits from the tax free UK personal allowance. If this is removed he pays that allowance in tax in the UK. He cannot get that back. He has no income here derived from Oz so pays no tax here in Ozm

old.sparkles

Why doesn't he just transfer his savings to an Oz bank account then?

NickyC

Seems sensible.

Problem solved!