Hard Brexit could mean UK nationals lose personal tax allowance

Thousands of UK nationals living overseas and regarded as non-resident in the UK for the whole of a UK tax year could lose their entitlement to the UK personal allowance if there is a hard Brexit as they would no longer be an EU/EEA national.

Robert Salter, a specialist in expatriate and employment taxes at tax advisory firm Blick Rothenberg, said: “At the moment UK nationals who are non-resident in the UK are entitled to the personal allowance but is this about to change?

“The entitlement to personal allowances for UK citizens who are non-resident in the UK actually arises specifically from their status as EU/EEA nationals. This position is laid down in UK tax legislation, which was introduced in 2007.

“However, if we have a hard Brexit UK nationals who are living overseas and are regarded as non-resident in the UK for the whole of a UK tax year may lose their entitlement to the personal allowance.”

He added: “For the current tax year (2019/20), the personal allowance of £12,500 is available for such individuals to offset against UK sourced income that would otherwise be UK taxable – e.g. UK letting income or UK government service-related pension income. If the personal allowance were to be removed for such individuals, it would result in income automatically being subject to UK tax at a rate of at least 20%.

“Such a change may well reduce the net income of many UK nationals living overseas (e.g. in retirement) as well as requiring many more UK nationals overseas to file an annual UK tax return each year, because UK taxable income might no longer be covered by the annual personal allowance.”


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