post-Brexit HMRC personal allowance for EU citizens ...

5 posts in this topic

Any hint how the HMRC personal allowance for EU citizens resident outside the UK will be after 31/12/2020?

I take the answer is "probably will lose it, but nobody can tell yet because the UK government has not told us yet, just wait..."

If anyone knows better (but I can't see how that can possibly be), please tell...

Cheers,

 

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GOV.UK says:

You’ll get a Personal Allowance of tax-free UK income each year if any of the following apply:

  • you hold a British passport
  • you’re a citizen of a European Economic Area (EEA) country
  • you’ve worked for the UK government at any time during that tax year

You might also get it if it’s included in the double-taxation agreement between the UK and the country you live in.

Claim the Personal Allowance

If you’re not a UK resident, you have to claim the Personal Allowance at the end of each tax year in which you have UK income. Send form R43 to HM Revenue and Customs (HMRC).

I would suggest that as it has not been changed at this stage then it is likely still to be accurate for next (tax) year, otherwise I would have thought it would have already been changed to say for 2020/21 the position is xxxx (as above) and for 2021/22 it is or may be changed to xxxx. 

 

Given that major tax announcements of this sort are made as part of the budget and have to be legislated in the relevant Finance Act also points to nothing changing for at least 2021/22.  BUT nothing would surprise me these days...

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I decided to dig a little deeper as the issue intrigued me and now I am somewhat unsure of the position.

 

Although HMRC's guidance and, so far as I can find, the law, have not been changed, it seems there might be an unintended consequence of Brexit but don't quote me as there maybe something (or should I say, should be something) elsewhere in legislation to provide continuity but ...

 

The right to claim the UK personal allowance is dependant on Section 56 of the Income Tax Act 2007 (Residence etc of Claimant).  The individual meets the requirements to claim if they are UK resident for the tax tear (S56(2)(a)) (makes perfect sense), or a national of an EEA State by virtue of S56(2)(b) and (3)(za), or a load of other qualifying criteria that are not relevant here. 

 

There is no explicit mention of UK citizenship, i.e. holding a UK passport as set out on GOV.UK but until we left the EU the UK was of course an EEA State, so qualification came through that subsection. However, the UK has now left the EEA, (hence the need for a separate withdrawal agreement with non-EU EEA states like Norway and Lichtenstein) which would seem to mean that there is no change for nationals of EEA States, i.e. they continue to qualify for the UK personal allowance but non-resident UK nationals no longer qualify. 

 

I don't whether @PandaMunich has been asked this question or looked at the relevant rules but the outcome does appear counterintuitive.

 

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Well spotted - I should have checked back here before going on my personal search to find something as I could not imagine that it had been overlooked.

 

Actually, looking at the briefness of the regulations, (making minor tweaks to only two completely unrelated areas of the taxing statute), and given that significant changes were made to the Income Tax Act 2007 by the 2019 equivalent of these regulations, my guess is that they were indeed made and laid to correct an oversight.  But who cares, the law remains as-was...    

 

As you say, no change for now and unlikely to be changed without a future consultation of some sort given that the last consultation on this issue was in 2014.

 

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