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Expat Focus Financial Update March 2024

HMRC Complains About ‘Stealth Expats’

Although there has been a steep decline recently in the number of expats contacting HMRC with news of their move out of the UK, tax experts remain sceptical. The volume of P85 forms received by HMRC in 2019-2023 (these tell the tax authorities that someone has left the country for a tax year) fell by 43%.  ‘Stealth relocations’ are the answer to the apparent drop, according to finance authorities talking to the Financial Times in late February. Price Bailey told the paper that:

“What we are seeing instead [of overseas secondments] is a surge in informal arrangements in which directors or staff work abroad, often without the knowledge of their employers. Whereas overseas workers might get away with not reporting short-term stints, we are increasingly seeing employees who are based more or less permanently abroad. This can trigger all sorts of tax, social security and other legal consequences for both individuals and employers.”

With the rise of remote working during the pandemic, there has been a corresponding increase in the phenomenon of employees working from abroad without telling their employer – or HMRC. Tax experts say that many people assume that if they’re paying taxes in the UK, they don’t have to make tax declarations in their new locale. Unfortunately, this isn’t necessarily the case. Law firm Gibson Dunn told the FT that both employers and employees may believe themselves to be tax compliant when in fact they’re in breach. Tax authorities may have taken a lenient view during the emergency measures of Covid-19, but they’re now back to normal. While they may not need you to fill out a P85, that’s a decision that HMRC needs to make – not individual tax payers.

Canada: Trudeau Delivers a Property Blow to British Buyers

The Canadian government has put a block on foreign buyers purchasing property until 2027, to free up real estate for asylum seekers, temporary workers and international students. Violating the new regulations – for example, if you’re a Brit resident in Canada who buys a second home – could result in a C$10K fine and a compulsory purchase order.

This move was announced in early February. Finance Minister Chrystia Freeland told the press that the move is to stop an escalation in property prices.

“…by extending the foreign buyer ban, we will ensure houses are used as homes for Canadian families to live in and do not become a speculative financial asset class. The government is intent on using all possible tools to make housing more affordable for Canadians across the country.”

But some property experts say that a price rise is already happening, along with a rise in rental costs. In some areas, house prices accelerated by 46% between 2020 and 2022. They warn that proposed increases in levels of immigration will result in a hike in property prices anyway. Some economists say that foreign owners are not the main engine behind property price rises, blame a lack of new property for the hikes, and criticise the new rules for being a ‘political’ stunt.

“Cheapest Places” for British Expats

In late February, Property Guides released its assessment of the cheapest places for British expats to relocate to. It suggests that the top five European nations are:

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  • Spain: £701 cheaper pa
  • Italy: £553
  • Portugal: £510
  • Greece: £506
  • Germany: £288

It pinpointed areas in which these countries are substantially cheaper, such as energy costs and grocery shopping in Spain. However, the Antipodes do not fare so well, with Australia coming in at £166 pa more expensive and New Zealand at a substantial £366 pa. Grocery bills and restaurant costs are more expensive in Australia, although energy bills are significantly cheaper than the UK. They also point out that your pension won’t be triple locked if you move to Australia or New Zealand, either.

Molo Finance Joins Expat Mortgage Lenders

UK-based digital mortgage lender, in partnership with Australian online bank ColCap Financial, is aiming its new products at British expats in Hong Kong and Singapore, but also the EU and UAE, the property press reported in late February. Molo is offering a one-year fixed product from 4.99%, plus two and five-year fixed-rate products from 6.24%. CEO Matthew Kimber says that there is a strong demand for expat lending in the mortgage broker market, and the company has seen £1.7bn mortgage applications since its inception in 2018.

Currencycloud and TangoPay Join Forces

FinTech companies Currencycloud and TangoPay have teamed up to offer expats a range of enhanced services, from reduced transaction times to real time exchange rates and lower fees.

TangoPay’s founder Basir Sangerwal says that the two groups are an excellent fit, since prior to the integration TangoPay relied on traditional ForEx methods. These, Sangerwal says, might have been effective, but they limited the company’s scalability and the range of payment options it was able to offer. Currencycloud’s APIs have allowed them to extend their range of services to expats looking for currency exchange. Currencycloud’s chief strategy officer Aleks Stefanovski agrees, saying that the move has allowed TangoPay to offer competitive real-time FX.

An End to Non-Dom Status?

On 6th March, the UK Chancellor, Jeremy Hunt, announced that the government will scrap non-dom status.  HMRC estimates that there were around 68,800 people claiming non-dom status in 2022, although studies undertaken by the Institute for Fiscal Studies suggests a much lower figure, one which nevertheless still brings in around £6 bn in tax. Research by the LSE and the University of Warwick suggests that the removal of non-dom status could save over £3bn per annum.

There is also speculation in the press that the new rules could give British expats a reduction in their inheritance tax. This isn’t definite yet – the Treasury says that it is going to look at the best ways to move IHT to a residence-based regime. But tax experts warn that you may need to keep a closer eye on your tax status if you’re a British expat in the years to come, although no firm changes are due to come in until 2025.

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