Why expats should keep an eye on the UK Budget
Less than a year on from George Osborne’s ‘Pension Freedoms’ announcement, the 2016 budget is fast approaching and with more changes likely after an eight-month Treasury consultation we take a look at three rumours that are keeping the pensions industry and expat savers in general awake at night.
1. Flat-rate tax relief on contributions
The current system is said by some to favour higher earners. The introduction of a flat rate with figures being thrown about ranging from 25% to 35% would be beneficial for basic rate taxpayers who currently receive 20% but would make higher rate and top rate tax payers worse off.
This would save the government money but, as has been pointed out vehemently by the pensions industry, higher and top rate taxpayers stand to lose.
2. Reducing Allowances
Currently the amount you can save into a pension is capped in two ways
- Lifetime Allowance (LTA) – Already set to be reduced from £1.25m to £1m on April 6th
- Annual Allowance – Presently set at £40,000
The LTA is set to be index-linked to inflation from 2018-2019 so there is still time to reduce this further and experts believe it is highly likely that there will be a reduction to the annual allowance.
Both scenarios would save the government money and would make it less appealing for workers to save more.
3. Doing nothing
Another possibility is that there will be no changes. This is highly unlikely as making no changes after an eight-month consultation into saving money for the government and improving would leave the chancellor with a lot of difficult questions to answer
