I think reactions to this proposal are rather alarmist.
It seems to me that the lifebelts for most of us will be found in Paragraphs 4.1 and 5.2. The document makes it fairly clear that HMRC are not after pensioners, indeed they are mentioned as worthy of special consideration. They seem more concerned with foreign citizens who have never been UK citizens and have invested heavily in UK property and claim the allowance against the rents. If they have a large family and share the property(ies)) between them they can claim quite a few individual allowances against the rent making it quite easy to cover several tens of thousands tax free.
Still I do agree that it is worth lodging comments to try and limit too many “unintended consequences” which are all too common with HMRC and other government bodies when they punt their latest “bright ideas”. All too often they end up missing the real target and causing a lot of trouble to honest citizens. (eg gun law, target shooting pistols etc etc.)
Once again the honest suffer and those that have not registered as living abroad get away with it. they still use the NHS for their medical treatment, medication, dentists etc. and will still get the heating allowance when we honest people do not. It doesn't pay to be honest in the UK.
I have just had a look at the consultation document which I attach here for those with an hour to spare and a high boredom threshold. Section 6.6 seems to suggest that Debra is correct about UK government pensions although it has been widely reported that the opposite is true. The introduction of a percentage test is covered in 5.2.
My understanding (for what it's worth as a former tax adviser) is that this proposal is unlikely to affect those expats who receive the majority (more than 75% or 90%) of their income from the UK. Anyone working in France or receiving a French pension (or other French income) appear to be the intended targets for this proposal.
I haven't read the whole document and the proposal is still under consultation. I would expect draft legislation to appear in the Autumn statement if the proposal is to be enacted in April 2015. I know people need to plan but it's probably best to wait until then (November/December) for the definitive rules. Alternatively, get professional advice as suggested by James.
Happy reading!
£36,000 pension, Blimey! that's some pension pot we must have contributed to ;-)
There's been a fair bit of scaremongering about this proposal but it actually won't affect as many expats as you might think.
Anyone not resident in the UK after April 2015 may no longer benefit from the personal allowance which is currently £10k. However, the UK state pension and most UK private pensions are taxable in your country of residence not in the UK. Therefore, this new rule is going to mainly apply to expats who receive UK government pensions (nurses, civil servants etc) and those who receive income from renting out UK property.
I attach a link to a good article about this subject. Hope this helps.