CIPP survey restricting non-residents? entitlement to the UK personal allowance

18 August 2014

The CIPP policy team have created a survey to collect member views as to the government giving consideration to the restriction of access to the UK personal allowance for non-residents.

This consultation is at stage 1 of the consultation process, whereby it looks to set out objectives and identify options and as such is making no specific proposals. The high level principles of this consultation exercise and for any policy that is taken forward include:

  • fairness: the effect of the UK Personal Allowance must be fair for all UK taxpayers and the Exchequer
  • simplicity: any change must be as simple as possible for those people and businesses who would be affected to understand and implement
  • competitiveness: any restriction to the UK Personal Allowance must not undermine the competitiveness of the UK as an international destination for work and investment

The UK personal allowance is very generous and amongst the highest in the world and it is currently granted to more non-residents that many other tax jurisdictions. Many other countries restrict non-residents’ entitlement and the government is currently considering whether the UK should also look to place some form or restriction or test on eligibility for the UK personal allowance.

The consultation paper Restricting non-residents’ entitlement to the UK personal allowance is available at GOV.UK website and provides:

  • In chapter 2 - the current rules for how non-residents are entitled to the UK Personal Allowance;
  • In chapter 3 - the case for restricting the entitlement of non-residents to the UK Personal Allowance which includes a comparison of the UK to other jurisdictions;
  • In chapter 4 - how other countries operate a restriction on non-residents’ entitlement to equivalents to the UK Personal Allowance; and
  • In chapter 5 - seeks views on a possible model for restricting entitlement to the UK Personal Allowance for non-residents.
  • In chapter 6 - sets out the government’s initial assessment of the impact of any change in entitlement on individuals and businesses. Given the complexity of international tax provisions, it breaks this down by different types of taxpayer and different forms of taxable income.

This survey is aimed at all members and whilst many of the questions may prove to be more of relevance to members who work with inbound or out bound expat employees/pensioners, or employees who are non UK residents e.g. seasonal workers from overseas, importantly for payroll, the survey also includes questions about the starter process and the impact on PAYE processes and any proposal or suggestion that impacts upon the starter process will impact upon anyone who is required to operate PAYE i.e. employers, payroll practitioners, pensions schemes, agents and software developers.

Because of the high level nature of this consultation you will need to have sight of the consultation paper whilst completing the survey which closes on 19 September 2014.

Thank you for sharing your valuable time to help develop future proposals for entitlement to the UK personal allowance.