UK Autumn Budget 2024: FAQ

1. How will the increase in Capital Gains Tax (CGT) affect me as a UK expat?

The CGT rate increased to 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers on October 29, 2024. This applies to all assets, including property and investments. If you sell assets in the UK after this date, you'll be subject to the new, higher rates. For example, if you sell a property with a gain of £200,000, your CGT liability will be £48,000, up from £40,000 under the previous 20% rate.

2. What are the implications of Inheritance Tax (IHT) now applying to unused pension funds?

From April 6, 2027, any unused pension funds will be subject to IHT upon death. This means that if your pension fund exceeds the nil-rate band (£325,000), your beneficiaries will be liable for 40% IHT on the excess. For example, if your pension fund is worth £600,000, the excess amount of £275,000 will be subject to a £110,000 IHT charge.

3. How does the expanded Overseas Transfer Charge (OTC) impact my QROPS options?

The 25% OTC now applies to QROPS transfers to the EEA and Gibraltar, effective from October 30, 2024. This means that if you're a UK expat residing outside the EEA, like in Vietnam or Thailand, transferring your pension to a QROPS in those regions may not be as tax-efficient as before. You could face a significant tax charge unless both you and the QROPS are in the same jurisdiction.

4. What changes have been made to the Stamp Duty Land Tax (SDLT)?

From October 31, 2024, a 5% SDLT surcharge is applied to purchases of additional properties. Additionally, companies purchasing properties over £500,000 will now face a 17% SDLT rate. For example, if you, as an expat, buy a second property worth £600,000, you will have to pay an additional £30,000 in SDLT. If the purchase is made through a company, the SDLT will amount to £102,000.

5. How does the new CGT rate for trusts affect my estate planning?

Trusts now face the same increased CGT rates as individuals on gains exceeding their annual exempt amount (half of the individual allowance). This impacts the tax efficiency of using trusts for wealth preservation and transfer, especially for expats. While trusts can still be beneficial for IHT planning, careful consideration needs to be given to the potential CGT implications.

6. Are QNUPS still a viable option for estate planning after the recent changes?

While QNUPS will be subject to IHT from April 2027, they can still be a useful tool for holding diverse assets and achieving tax-deferred growth. However, it's crucial to review your QNUPS strategy and consider alternatives, like trusts, to mitigate potential IHT liabilities. Expert advice is recommended to ensure your estate plan is optimized for your specific circumstances.

7. What opportunities are available for UK expats to mitigate the impact of these tax changes?

Despite the changes, opportunities exist for UK expats to optimize their tax position. Consider these strategies:

• Strategic Timing: Selling assets before further CGT rate increases in April 2025 and 2026 can save on tax.
• Offshore Bonds: These offer tax-deferred growth, only taxing gains upon withdrawal.
• DTA Benefits: Leverage Double Taxation Agreements to minimize tax on UK pensions and other income in your country of residence.

8. Where can I get further information and personalized advice on these changes?

• UK Government: Consult the official Autumn Budget 2024 documents on gov.uk for detailed information.
• Financial Advisors: Seek advice on tax, retirement, and estate planning from qualified financial advisors specializing in expat tax and estate planning - people like us!
• Specialized Resources: Explore resources focused on expat tax in your specific region, such as Thailand or Vietnam, for local insights and regulations.

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