Possible withdrawal of personal allowance for non-residents

On 17 July 2014, HMRC announced a new consultation on whether entitlement to a personal allowance should be restricted for non-residents and how this might be done. At present most non-residents are entitled to claim the full UK personal allowance. UK nationals are entitled to claim the personal allowance wherever they are resident. The non-discrimination article in most double tax treaties extends the entitlement to UK personal allowances to nationals of treaty countries who are also resident there.

The consultation proposes that going forward UK personal allowances will only available to:

  • UK residents; and
  • Non-residents who receive most of their income from the UK.

This will be particularly relevant to non-residents who have UK rental income and secondees working to the UK for a short period of time.

The wording of the consultation documents suggest that ‘most income’ will mean more than a given percentage of an individual’s worldwide income (either 75% or 90%).

The deadline for responses is 9 October 2014.

For further information about the tax treatment of non-resident individuals please contact the TaxDesk on 0845 4900 509 and ask for Priya Dutta.