Time is up for expat tax loophole, and that's a good thing

The government plans to stop expats claiming personal allowance

Updated: 
green expat key on a computer...

Plans to close a tax loophole that has benefited expats may hit older people but its time we start thinking about those left in the UK rather than outside it.

There are rumours that chancellor George Osborne plans to put an end to a tax loophole that lets non-residents offset income against their personal allowance. This means that those no longer living in the country will no longer be able to take the first £10,000 of income, whether that's from a pension or second property, tax-free.

It's about time this abuse of the tax system was closed down as it costs £400 million a year. Expats have decided to leaves, to take their money elsewhere and crucially spend it in a different economy. They no longer contribute tax to the UK, not just income tax, but council tax, VAT and other indirect taxations, so why should the UK give them a tax break?

People will argue that many of those expats are retired and have paid into the British system their entire life so deserve to get something back – well they do, a state pension that we're all still paying for. If they're not contributing to the coffers by spending their pension in this country then it shouldn't benefit from a personal allowance, it's as simple as that.

Property argument

Of course, there is another reason why the personal allowance for expats should be scrapped: property.

There are 175,000 people who live abroad and earn money from a property, again money that is earned in the UK but not spent here.

Tax experts are already foretelling of a sell-off in expat property in the UK if they can't earn £10,000 of their rental income tax free each year, and to that I say: good.

We need more properties in this country, what we don't need is landlords making a few quid off a rental property and taking a huge chunk of that money away to another country without paying tax on it.

You could see the clampdown on expats as a redistribution of wealth; expat has to sell home because they'll get taxed, meaning a person who needs a home in the UK can actually buy one and hopefully at an affordable rate as a mass sell-off in expats rental homes would even out the supply-demand equation.

Expats have had it too easy, you can't just take from a country without giving back and it would seem the government has finally caught up with them.

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