Whilst discussing British pensions (Our Community, PM November 21) let’s not forget the very nasty surprise which could be in next year’s UK budget: the possibility that UK expats will lose their personal tax allowance and be taxed at pound one by the Inland Revenue! The British Chancellor announced earlier this year he would be examining such a proposal in committee on the grounds that Britain is much more generous in its treatment of expats than most other EU countries.
If the proposal were introduced as crudely as that – and the Chancellor said he wanted a simple-to-understand wholesale revision – all British expats with a UK tax code and allowance would promptly lose the cushion. So a single guy would lose the benefit on his first 10,000 pounds of income – 20 percent of that sum is 2,000 pounds annually down the drain. Married couples would lose 4,000 pounds annually and better-off expat Brits with income in UK would start paying super-tax (40 percent) on less income than at present.
The Brits worst-affected, and there are hundreds in Pattaya alone, would be those in receipt of UK state and public sector pensions (e.g., former teachers, social workers, police, etc.) who would see their income well and truly plummet. These pensions are taxed only in UK. If the worst-case scenario proves to be true, without special treatment for luckless public sector retirees, it is not unreasonable to expect an exodus back to UK in a fit of self-protection.
These suggested reforms make the traditional concerns of the British expat community – that their old age state pensions are frozen – pale into insignificance. That’s peanuts by comparison. Incidentally, the time limit for contacting the government committee has now expired, so it’s wait and see time until March 2015.