Withdrawal of UK tax allowances for non-UK residents
The measure
Individuals who are not tax resident in the UK can qualify for certain allowances, such as the personal allowance, if they fulfil certain criteria, such as if they are a national of an EEA country, resident in the Channel Islands, or Commonwealth citizen. This is not compliant with Human Rights Act because it gave Commonwealth citizens greater rights than those who were not. Legislation is to be introduced to remove the right to claim personal allowances by individuals purely by being a Commonwealth citizen. The allowance can be set against UK source income to reduce their UK tax liability. Many non-resident individuals will still be able to claim the personal allowance because of the terms of a double tax agreement between the UK and their country of residence. A list of those countries whose citizens are likely to be mainly affected by the withdrawal include: Bahamas, Cameroon, Cook Islands, Dominica, Maldives, Mozambique, Nauru, Niue, St Lucia, St Vincent & the Grenadines, Samoa, Tanzania, Tonga and Vanuatu.
Who will be affected?
Individuals who are not UK tax resident with UK source income and are currently able to claim UK tax allowances and who cannot claim them as a result of a double tax agreement.
When?
The removal of the personal allowance will take effect from April 2010.
The removal of the tax allowances will disadvantage certain individuals who live outside the UK. It is being introduced to comply with the Human Rights Act and is being introduced as a necessity.
