The Budget will take place on Wednesday 26 November, the chancellor has announced.
Why the UK Budget Still Matters if You’re Abroad
It’s tempting for expats to think the UK Budget no longer affects them. But if you hold UK property, pensions, or investments, or plan to return one day—policy changes can have a direct impact on your wealth.
With the UK shifting from a domicile-based to a residence-based tax system, the 2025 Budget is likely to bring further adjustments that expats need to watch closely.
Key Themes Likely to Surface in the 2025 Budget
1. Inheritance Tax Tightening
- From 2027, pensions will be brought into the IHT net.
- Expats who’ve lived outside the UK for fewer than 10 of the last 20 years may still face UK IHT on worldwide assets.
- Expect further tightening or clarification on how residence links to IHT exposure.
2. Capital Gains Tax (CGT) Increases
- Rates already increased in the Autumn Budget 2024.
- More rises, or alignment with income tax rates, could be on the horizon.
- Expats with UK property or business sales in the pipeline may want to plan ahead.
3. Pension Tax Adjustments
- Lifetime allowance has been replaced with the Lump Sum Allowance and Lump Sum Death Benefit Allowance.
- The government may refine or restrict rules to close perceived loopholes.
- Expats drawing from SIPPs overseas should pay close attention.
4. Residence vs Domicile
- With the transition to a residence-based regime, Budget 2025 is expected to include more detail.
- This could affect long-term non-residents, temporary non-residents, and individuals planning to return.
What Expats Should Be Watching Closely
- UK property owners – Higher CGT rates or new stamp duty changes.
- Business sellers – Potential adjustments to Business Asset Disposal Relief.
- Trust and bond holders – Anti-avoidance provisions may be strengthened.
- Returning expats – Temporary non-residence rules could tighten further.
Practical Steps to Take Now
- Review estate plans – Ensure wills and trusts are aligned with potential IHT changes.
- Reassess property strategy – Consider timing of UK disposals.
- Check pension structures – Explore whether offshore or trust planning still works in your favour.
- Stay flexible – Build adaptability into your financial plan.
Forward-Looking View
The UK’s fiscal direction is clear: broaden the tax base, close loopholes, and increase revenue from wealth. Expats, often assumed to be “wealthy”—are firmly in HMRC’s sights.
Final Thoughts
The 2025 UK Budget may reshape how expats structure their wealth for years to come. By anticipating likely changes and preparing now, you can avoid rushed, reactive decisions later.
A proactive review today could save significant tax tomorrow.
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