ProACT Sam reflects on potential negatives of a UK tax dystopia in 2026 for expats Living and Working Abroad.
Currently UK citizens have the right to become non-resident and not tax resident in the UK.
With a lifetime of building income, savings, wealth to secure your retirement and family down the generations all looked good.
Post World War 2 there were income taxes and indexation, you could work hard and build a business, savings or property wealth for you and your family down the generations.
Post World War 2 you would be paying an Income Tax. While the UK government post 2nd world war had massive international debt that was reduced over the decades as the people of Britain rebuilt wealth for the future.
Britain was still at its creative best with George Orwell writing deeply insightful and visionary novels including Animal Farm, where every animal was equal, but some were more equal than others (the pigs…), and in 1948 he wrote the novel ‘1984’ which envisioned a dystopian future where Big Brother was always watching you, as if he imagined road traffic cameras, facial recognition, id cards, internet log ins, police surveillance of social media, and restricted freedoms to choose how you were educated, and own personal possessions, with income, capital gains, inheritance and pension funds all taxed.
CAPITAL
Then the worm started to turn. In the mid 60’s a Labour government introduced Capital gains taxes. A tax on the profit you make from investing, property or building business wealth.
By the Halloween budget of 2024 this had risen to 24% of your profit.
Plus property gains are fixed in the UK and the tax is always paid.
You could still realise an investment gain from the UK and avoid capital gains tax with conditions… you remain non-resident to the UK for 5 years longer. But Big brother will keep a close eye on you, the tax is assessed, and is only a deferred payment liability payable if you return too soon.
Will this situation survive the next UK Budget? Doesn’t need to change, unless a government in debt needing to raise funds and decides to lock your investment gains into Tax Prison Island UK.
This could be sold on the basis of not taxing working people, only anyone wealthy enough to be earning more than £3000 profit on investments of a lifetime.
The personal allowance on investment gains used to be £12300 3 years ago, why not remove the allowance and tax concessions for non-resident expats.
Noting, if you live as a tax resident in a country with capital gains on worldwide assets, then you may well be paying tax abroad anyway.
Cyprus offers continued benefit for expat tax residents with zero Capital Tax Gains Tax and 0% Dividend and Interest tax,
Cyprus tax resident expats with UK expats could realise current investment gains under current rules, and pay no capital gains tax now, and reinvest in a no tax environment.
INHERITANCE
In the 1990’s Inheritance taxes were introduced as a new way to redistribute wealth, mainly to the government ? Death duties had been around for years, Inheritance tax was a simplification, but 40% tax ? ,,, all going into the government trough to be devouChatred by the more equal political elite, rather than distributed say among your 5 family beneficiaries?
Inheritance is a tax that has become very attractive to our big brothers in the UK treasury as an aging population that has built a generation of wealth, start to die off.
It is the fastest growing source of new revenue for the UK Government and will only get better for them.
In the Halloween budget of 2024 they added your UK self-invested pension fund.
Do the maths, a £325,000 pension fund generates around £15,000 pension sustainably. So the wealthy people with more than £15,000 pa pension, who have spent a lifetime working and saving a fund for them and their family ,,,, have 40% tax liability.
Your pension fund now uses an individual’s personal allowance and ramps up your death taxes some more.
If you are a Cyprus Tax resident, with your UK pension tax registered here, you can draw up to all your fund now and pay just 5% tax at a flat rate, and reinvest the balance in a no tax environment.
FIXED
The upcoming UK budget heralds a long winter ahead. Far left tax and borrow government policies mean that the UK Government Debt is now greater than after WW2. The government needs to raise taxes … are they watching your income, investment, capital or pensions to raise taxes or their credit rating so they could borrow more?
How could the big brothers change tax rules without taxing working people?
By taxing the wealthy to make people more equal, apart from the more equal ones on gold plated ring fenced government benefits and pensions,
Changes could include:
- Locking pensions into fixed uk taxation
- Removing capital gains tax relief for expats
- Introducing a flat rate wealth tax on worldwide assets
- Juggle property taxes to replace council and stamp duties with a single flat rate payable by all the wealthy people owning property (even though the capital asset does not generate extra income)
- Introduce extra ‘flat rate income tax’ to those who invest to generate ‘unearned income’ from property rental i.e. national insurance on property rental income.
HAVEN
Cyprus has taxes, but has not got a big brother. There are no capital gains taxes on investments, or inheritance tax on any property, investment, pension wealth.
Cyprus is a fully tax compliant international destination for expats with double taxation treaties that protect Cyprus tax residents from big brother back home.
The Cyprus tax regime rewards wealth building and allows you to pass business, property and investments to your children, down the generations without capital gains tax.
ProACT Partnership are Cyprus Tax Saving Expat Experts, contact us for a Free Review, advice and guidance on how to save 40% tax liability on your UK Pensions, Investment and Property. ProACT Know How to benefit your family and business.
ProACT Sam Orgill
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