Income Tax

Personal allowance

£12,750

* Personal allowance reduced by £1 for every £2 of adjusted net income over £100,000

**Frozen at this level until at least April 2026

UK income tax rates – excluding Scotland (non-dividend, non-savings)

20% basic rate on taxable income from £12,751 to £50,450

40% higher rate tax on taxable income from £50,451 to 150,000

45% additional rate tax on taxable income over £150,000

Scottish income tax rates (non-dividend, non-savings)

19% starter rate on taxable income from £12,751 to £14,655

20% basic rate on taxable income from £14,656 to £25,228

21% intermediate rate on taxable income £25,229 to £43,500

41% higher rate on taxable income from £43,501 to £150,000

46% top rate tax on taxable income over £150,000

Pensions

Personal or employer pension

Lifetime Allowance £1,073,100

*Frozen until April 2026

** Find out how you can mitigate the Lifetime Allowance here.

State Pension

Qualifying years required to obtain maximum New State Pension – 35

Maximum New State Pension (state pension age reached after 5th April 2016) – £9,339.20

Maximum Basic State Pension (state pension age reached before 6th April 2016) – £7,155.20

Making up missed years

As an expat, you can boost your state pension entitlement by making voluntary National Insurance Contributions:

Class 2 – £3.05 per week

Class 3 – £15.4 per week

*You can read more in my Expat State Pension Guide

Capital Gains Tax

You will only be subject to UK capital gains tax on the disposals of UK real estate. Gains on the disposal of other investments will be taxed in your country of residence.

CGT rate on disposal of UK property when below the UK higher rate income tax band – 18%

CGT rate on disposal of UK property when within the UK higher rate and additional rate income tax bands – 28%

*You can find out more about the CGT rules for expat owners of UK property here

Stamp Duty on Property

England and Northern Ireland – Stamp Duty Land Tax (SDLT)

Up to £125,000 – 0%

£125,001 – £250,000 – 2%

£250,001 – £925,000 – 5%

£925,001 – £1,500,000 – 10%

Over £1,500,000 – 12%

COVID Relief

From 8th July 2020 till 30th June 2021, there will be a 0% SDLT rate on the slice of a property value up to £500,000.

From 1st July 2020 until 30th September 2021, there will be a 0% SDLT rate on the slice of a property value up to £250,000.

First Time Buyers

0% SDLT on the first £300,000 for properties up to £500,000

Non-resident Purchasers

2% surcharge on properties valued at £40,000 or more.

Additional properties

3% surcharge on additional properties valued at £40,000 or more.

Scotland – Land and Buildings Transaction Tax (LBTT)

Up to £145,000 – 0%

£145,001-£250,000 – 2%

£250,001-£325,000 – 5%

£325,001-£750,000 – 10%

Over £750,000 – 12%

First Time Buyers

0% SDLT on the first £175,00

Additional properties

4% surcharge on additional properties valued at £40,000 or more.

Wales – Land Transaction Tax (LTT)

Up to £180,000 – 0%

£180,001 – £250,000 – 3.5%

£250,001 – £400,000 – 5%

£400,001 – £750,000 – 7.5%

£750,001 – £1,500,000 – 10%

Over £1,500,000 – 12%

Additional properties

4% surcharge on additional properties valued at £40,000 or more.

Inheritance Tax

Nil-rate band – £325,000

Residence nil-rate band – £175,000

*100% of the unused proportion of a deceased spouse’s/civil partner’s nil-rate band and residence nil-rate band can be claimed on the survivor’s death.

**For estates in excess of £2,000,000, the value of the residence nil rate band is reduced by £1 for every £2 over the threshold

Rate of tax on excess – 40%

Non-domiciled spouse/civil partner exemption – £325,000

*The rules when leaving an estate to a non-domiciled spouse are more complex. You can read more here.

Annual exempt gifts:

£3,000 per doner

£250 per donee

Tapered tax charge on lifetime gifts within 7 years of death

0-3 years between gift and death – 100% (of 40%)

3-4 years between gift and death – 80% (of 40%)

4-5 years between gift and death – 60% (of 40%)

5-6 years between gift and death – 40% (of 40%)

6-7 years between gift and death – 20% (of 40%)

After 7 years, the gift falls outwith the estate for Inheritance Tax purposes

Tax Incentivised Investments (ISA etc)

None. As expats we don’t qualify. Sorry.

Main Due Dates for Tax Payments

Income Tax – Self Assessment

31st of January in year following 31st July – Normally 50% of previous year’s income tax

Following 31st of January – Balance of income tax

Capital Gains Tax 

CGT incurred following the disposal of a residential property will have to be paid within 30 days of the completion date in all cases

Inheritance Tax

Normally 6 months after the end of the month of death

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I hope that you found this guide useful!

Every Tuesday, I send out a short email to British expats who are thinking about retirement. 

In it, I include updates on tax issues that are likely to affect them.

It usually only takes a few minutes to read. 

To receive it in your inbox, just enter your name and email address here –  https://mailchi.mp/24b18b4330d2/the-expat-retirement-digest

All the best,

Ross Naylor

ross.naylor@aesinterntational.com