Court of Appeal’s Expat Tax Ruling

As the “will they, won’t they” saga of Brexit rumbles on it is useful to look at some of the things expats can actually do to reaffirm their ties with the UK in the event that they plan to move back to Blighty at some point in the future.

The issue has taken on a new urgency for expats, particularly in regards to property, in light of the new surcharge that the government plans to introduce alongside stamp duty on second home and buy-to-let purchases in England.

Although Prime Minister Theresa May says that the surcharge is for “foreign buyers” and is being introduced with a view to assisting UK taxpayers buy a property – especially first-time buyers – it may have some unintended consequences.

This is because it is not just foreign buyers who are likely to find their pockets hit by the tax. Returning expats – who could well be a prominent demographic over the next few years – may also find themselves liable for the surcharge, potentially setting them back significantly on their way to reaching their wealth management objectives.

The defined benefit scheme – whereby the employer promises the employee a specified payment upon retirement, the amount of which is calculated based on several factors including the years the contributor has been in the scheme, their age, and their salary at retirement – is no longer viable in today’s world.

Recently, the high-profile collapse of the construction firm Carillion has served as yet another example of why this is the case.

The collapse means that, just like in the heavily reported case of retail giant BHS, thousands of employees are likely to have their carefully laid out retirement plans affected. Now that the company has gone into liquidation, it cannot afford to pay employees their expected pension amount, leading to yet another sizeable pensions black hole with a deficit of around £580 million (although the BBC reports that the final figure could be as high as £900 million).