Please Note: This Article is 5 years old. This increases the likelihood that some or all of it's content is now outdated.

The Treasury is considering removing the UK personal tax allowance for those living abroad according to an official proposal document.

Thousands of individuals who live permanently abroad, but claim the personal allowance for income earned in the UK could be affected.

Most of expats are able to claim tax relief in the country where they are living, so their tax bills will not be significantly affected.

But is an extreme case, removal of the personal allowance could mean a loss of up to £4,000.

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Many expats who live abroad earn income from their rented out properties in the UK and could be adversely affected by this.

This tax relief is very valuable to retired people living overseas who are being supported by small pensions, and those who receive income from renting their property in the UK.

It is estimated that around 170,000 UK citizens who live overseas receive income from renting out their UK property. Potentially, they can earn up to their UK tax allowance (£10,500 a year) or double this where their property is in joint names with a spouse, without paying any tax.

But the proposed changes would remove this tax break, leading to costs potentially running into the thousands for anyone not able to claim tax relief in the country in which they live.

Although these proposed measures are unlikely to affect most of the over 1 million UK pensioners who live overseas, because their pensions are taxable in their country of residence, some pensions are taxed only in the UK.

This latter group, plus UK property owners receiving income from renting out could be adversely affected.

Please Note: This Article is 5 years old. This increases the likelihood that some or all of it's content is now outdated.

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