The Budget presented by “Fiscal Phil” on 29 October 2018 offered UK pensions a reprieve from further change. However, some key announcements that could impact British expatriates included:
- Personal Allowance – the tax-free personal allowance (the amount of income you can receive before you have to start paying UK tax) will rise a further £650 to £12,500 in April 2019. This comes a year earlier than planned.
- Higher Rate Tax Threshold – the 40% higher rate tax threshold will increase from £46,350 to £50,000 in April 2019. This means that in 2019-20 there will be nearly 1 million fewer higher rate tax payers than in 2015-16.
- UK State Pension – the State Pension will increase by 2.6% from 6 April 2019. With CPI inflation of 2.4% in September 2018, and average earnings of 2.6%, the government has used average earnings to uprate the State Pension under the government’s ‘triple lock’ guarantee (whereby the State Pension rises each year by the greater of annual price inflation, average earnings growth or a guaranteed 2.5% minimum).
- Lifetime Allowance – the UK’s lifetime allowance, which is a limit over which any growth in a UK pension will be taxed at retirement, will increase on 6th April 2019 to £1,055,000 from £1,030,000.