Budget 2015 – A Summary For Expats
George Osborne delivered his sixth budget on 18 March 2015 and announced tax breaks for savers, a planned reduction of the Pension Lifetime Allowance with future plans to index this to inflation, an increased tax-free personal allowance and the additional flexibility in accessing ISA savings among other things. The most relevant highlights for expatriates from the Budget are outlined below.
OBR forecasts GDP growth in 2015 at 2.5%, up from the forecast of 2.4% at the Autumn Statement. OBR believes that the economy will expand by 2.3% for the next three years. Inflation is now forecast to fall to 0.2% this year compared to the December forecast of 1.2%.
Borrowing and Spending
The National Debt as a share of GDP will fall in 2015/16 for the first time since 2001. It is projected to be 80.4% in 2014/15 and 80.2% in 2015/16. By 2019/20 it is forecast to fall to 71.6%.
Savings and Pensions
From April 2016, a new Personal Savings Allowance will be introduced. This allowance will entitle the first £1,000 of interest earned on all savings to be tax-free. Higher rate taxpayers will have their allowance set at £500.
It was announced that the New ISAs, along with their increased contribution limits, will be made more flexible, allowing savers to maintain the UK tax-free entitlement if you take a distribution from the account and subsequently put the money back in later in the year. Additionally, the range of investments that are available within an ISA is expected to be expanded later this year. This could potentially spell good news for Americans who hold ISA accounts and need to avoid holding PFICs due to the detrimental US tax treatment.
In addition to the increased flexibility within New ISAs, a new Help to Buy ISA has been introduced to help first time home buyers save for a down payment. For every £200 saved, the government will top up the account with £50.
Andrea Solana is an expert on international tax and global wealth management. She is Head of Advanced Planning at MASECO Private Wealth. Andrea graduated from University of Virginiaís McIntire School of Commerce with a degree in Finance and Management, completed her MBA at Imperial College London and holds her US Series 65 license. MASECO Private Wealth is not a qualified tax adviser and you should seek separate advice on your tax position with a suitably qualified tax adviser.