Tuesday, 12 August 2014

"Expats face £400 million tax raid"

Emailed in by MBK from The Telegraph:

Expats who rent out their homes in Britain will be stripped of the right to use the personal allowance, under a tax raid prepared by George Osborne...

Under Treasury proposals released for consultation, the allowance would be restricted to people with a “strong economic connection” to Britain, bringing the tax regime into line with the US, Canada and much of the EU.

The move could affect up to 400,000 people and raise the exchequer an extra £400 million a year. It would include 175,000 people who live abroad and earn an income from property in Britain.

What's the problem?

Isn't there a traditional KLN that "Landlords will just add the tax to the rent so tenants will end up worse off?"

Go on then, let's see those 175,000 bump up their rents by a few thousand quid a year.
In any event, the whole article is complete nonsense.

Most countries levy full income tax on income arising in that country, in particular rental income. Most international tax agreements say the same and further, most countries include residents' overseas rental income in total taxable income, with a credit for any tax already paid at source (i.e. in the country where the land and buildings are).

So although some non-resident landlords might end up paying a bit more UK income tax, by and large, their tax bill in the country in which they live will come down by an equal amount.

Dinero says: "All else aside there is an irony in a proposal that those that live away from the products of taxation spending, pay more towards it."

Nope. The tax is on benefits received, i.e. land rent, itself largely the product of taxation spending. Further, the article talks about UK pensioners, who are getting proper cash money from the UK taxpayer.


Lola said...

It could be seen as the thin end of a very welcome wedge - the move to tax land rents.

Mind you the statist shits still want this as an 'extra' - as opposed to 'replacement' tax.

Dinero said...

All else aside there is an irony in a proposal that those that live away from the products of taxation spending, pay more towards it.

Dinero said...

Maybe the consideration is that the 10K does not contribute to "Keynsian agrregated demand" in the case of ex-pats.

Kj said...

Dumb f... As you say Mark, there is tax agreements, which will Level this out anyway. And secondly, why should non-resident expats be treated differently than non-resident foreigners, who also do not get any personal allowances? It just plays in to the entitlement sense that the Homeys have, that not only have they a permanent right to free land rents, they are supposedly entitled to special treatment because they lived somewhere once as well.

Ben Jamin' said...

Taxes on Capital=horrible complicated mess.

This being another example of.

Keeps some people in work sorting it all out, I suppose.

Mark Wadsworth said...

L, yes and possibly, respectively.

Din, see update.

Kj, exactly. It's just Homey drivel.

Bj, actually not. A low rate tax on gross rental values is not a million miles from a high tax rate on land rents.

Simply withdrawing the personal allowance is administratively quite simple and justified under the circumstances - and the extra tax they pay in the country where the land is is offset by a reduction in tax payable where they live (they still get the personal allowance in the country where they live).