Tories Fear Tax Hike For UK Expats

by Robert Lee, Tax-News.com, London

11 August 2004

According to a report in the Daily Telegraph, the Treasury’s refusal to rule out a shake-up of the tax rules for expatriates could leave many Britons living abroad facing higher tax bills in the future, a senior Opposition spokesman has claimed.

The issue has come to light following visits to Dubai, Hong Kong and South Africa - jurisdictions with sizeable UK expat communities - by Conservative Party chairman Dr Liam Fox who has since written to Gordon Brown’s enquiring into the Treasury’s plans for non-resident taxation.

Fox’s chief fear would be a switch to the American style tax system for non-resident nationals whereby expats will effectively pay the same amount of tax as if they were living in the United Kingdom.

Under current rules, Britons are taxed on income earned wholly abroad according to the tax rules of the jurisdiction in which they reside. The US government however, compels its citizens working abroad make up the difference between local tax and US tax if the former taxes are lower.

"It is clear from the Treasury's lack of a denial that it is looking at new ways to milk British taxpayers whether they live in the United Kingdom or not,” Dr Fox accused the government.

However, whilst the Treasury has admitted that the issue has been under review for several years, it insisted that no major changes to non-resident taxation are in the pipeline, a fact confirmed by independent tax experts, the Telegraph reported.

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