Americans living and working in Britain could face higher tax rates following the results of last November’s British general election and US presidential election.
Alex Straight, partner at Blick Rothenberg, a British audit, tax and business consultancy firm, and spokesperson for the firm’s international group, emphasized: “For Americans, this is the warm-up to the most important event of the US elections in November.”
He explained: “With Labour’s historic victory, they have been given a mandate to implement a long-term tax strategy. Although their manifesto promises to keep income tax, national insurance, VAT and corporation taxes unchanged, the non-domestic tax changes introduced by the previous Conservative government and retained by Labor will have a significant impact on many Americans in Britain. Historically, the non-British tax regime allowed many Americans in Britain to avoid tax liabilities on their non-British income and profits. This will generally no longer be the case in the future. Furthermore, Labor has not committed to capital gains tax rates. Currently, the main tax rate on capital gains in Britain is similar to that in the US, but any increase or change, especially in relation to carried interest, will increase the global effective tax rate for Americans in Britain.”
Straight continued: “To balance the books without major tax increases, growth is essential. We hope this is reflected in any proposed tax policy, given Labour’s healthy majority. Britain has always been a favorable destination for Americans to live and work. Although Britain has a large majority government, a similar outcome in the US is less likely in November. This year, marked by elections and changes, the first piece of the puzzle is falling into place. We should get more clarity with the first UK budget expected in September. However, the US election promises to be much closer, bringing with it more uncertainty about the future US tax landscape and its effects on Americans in Britain.”