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The recent UK budget introduces several new tax measures that could significantly impact UK expats and overseas residents.
While final legislation is pending, these provisions are already set to influence both current and future financial planning for UK expats. Here, we outline the most critical changes affecting British expats, with insights from Beacon Global Wealth Management.
One of the most substantial changes for British expats is the introduction of a 40% Inheritance Tax on unused pension funds upon death, taking effect from April 2027. This move will impact how expats can pass on wealth to family members, making efficient planning even more essential.
David Vacani, Founder of Beacon Global Wealth Management, explains: “This is a major tax hike on pension funds for our expat clients, but effective financial planning can help mitigate these effects.
‘’Many of our clients in Portugal are already leveraging Non-Habitual Residency (NHR) tax rules to withdraw pension funds while reallocating investments into more tax-efficient structures that suit post-NHR income needs.’’
The budget also modified the Overseas Transfer Charge, adding financial complexities to UK pensions in payment. This change is designed to prevent UK residents from benefiting from double tax-free allowances while residing in the UK and to limit the risk of UK tax-relieved pension savings being transferred overseas.
The modifications could also introduce currency exchange risks for British retirees living abroad or for expats considering UK pension transfers.
Niall MacDonald, Chartered Wealth Manager at Beacon Global Wealth Management, added, “This change forces clients to weigh the risks of currency fluctuations on pension income against a 25% charge on pensions transferred out of the UK.
‘’Careful financial planning is essential, and our team at Beacon Global Wealth Management is here to discuss pension transfer strategies and potential tax mitigation options with concerned clients.”
Navigating the complexities of the latest UK expat tax changes and budget updates is crucial for managing long-term wealth.
Our team at Beacon Global Wealth Management is available for consultation on how these changes might affect your financial situation. To explore how we can support your financial goals, please reach out to us at info@bgwealthmanagement.net.
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