Impact of budget and other recent legislation on UK expats

In terms of the impact on your personal savings, tax and pensions, 2017 saw some changes. Here are the good and bad ways in which new legislation could affect the finances of UK expats living abroad:

Personal tax

In his November budget, Phillip Hammond announced a small increase to the personal tax allowance; this applies to British expats as well as those still living in the UK. From April 6 2018, you may earn up to £11,850 before paying tax (was previously £11,500). Unlike his predecessor, George Osborne, Hammond did not imply that he would introduce any limits to tax relief for expats in the future.

In England and Wales, the 40% tax rate threshold for higher earners will also rise from £45,001 to £46,350. In Scotland, this threshold remains unchanged at £43,000. The threshold at which high earners begin to pay the additional tax rate (45%) also stays at £150,000 throughout the UK.

The November budget also heralds the inclusion of the bereaved in the marriage allowance. As long as they were eligible for it at any time from April 2015, widows or widowers can now claim backdated marriage allowance for up to four years. This new rule, which came into force on November 29, works out as a tax break of up to £662.


Impact of the budget on UK expats

The amount of income that a British resident can earn tax-free stays at £5,000, while the amount they can deposit in an ISA account also stays the same at £20,000 each year.

However, as an expat, you must bear in mind that you lose these tax benefits when you move to another country. As a result, any income you earn from interest is liable for tax in your country of residence.

Some UK expats still innocently believe that as long as they abide by UK tax laws, then they do not have to declare their income to their country of residence.

However, in June 2017, a global transparency initiative ensured that financial information will now be shared periodically by different financial centres across the world. This means that if you have a UK savings account that you have not declared in the country where you live, you could be liable for fines from that country’s tax collection agency.


Contrary to rumour, Hammond did not announce any changes to pension tax. However, the State Pension is set to climb by 3% in line with inflation. For those expats who have made enough National Insurance contributions to qualify, this means a further £191 per year for those who started receiving their pension before April 6 2015 and an extra £250 for those who began drawing their pension after that point.

The lifetime allowance will also rise with inflation. As of April 2018, you may earn £1.03 million (instead of just £1 million) without having to pay tax.

UK Expats – where to get more advice

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