Working in the UAE and TAX

Beno

Going to be taking a job in the U.A.E in Abu Dhabi nextmonth for a year or maybe 2 years depending how it goes.



As I understand it the way the tax works, is if I’m residentin another country and are out of the uk for a year I don’t pay tax on myincome. I will be getting payed in the UAE to a UAE bank account while I amworking here.



This where I get confused if I want to send money to my UKbank account in my first year in the UAE will I have to pay tax on that transferto my UK account? And what’s the maximum you are allowed to bring home ortransfer at one time?

I am looking at getting a HSBC account in the UAE, has anyone had any experiance with HSBC for sending money home?

CTA_2

Technically you will continue to be liable to UK tax throughout the time (in all probability).

However, HMRC will not treat you as a UK resident so long as you are out of the country for an entire tax year AND you don't spend more than 183 days in the UK.

IR20 is the HMRC guidance on this matter (google HMRC publication IR20 -- i can't post a link as a new member) and is particularly helpful.

The effect should be that you will cease to be liable to uk tax on non-uk source income on the date you leave the uk.

You will become instantly liable to UK income tax on your worldwide income and gains on the date you return.

In terms of remitting money to the UK, this should not attract any UK tax issues (maybe some UAE withholding tax but i would doubt it)

xylophone

http://www.hmrc.gov.uk/cnr/faqs_general.htm
http://www.shelteroffshore.com/index.php/living/more/working-in-dubai-10216

Apparently there is no exchange control in UAE so presumably you can remit whatever you like to your UK account? - HSBC should be able to
advise.

http://www.expatforum.com/expats/dubai-expat-forum-expats-living-dubai/13666-sending-money-dubai-uk.html this thread may be worth a look?

Beno

Ok so if for example.

I leave on the 1st of Nov 2012
Return on 2nd of Nov 2013

That whole time I wont have to pay tax on any mony I send to my uk account?

But when start working in the Uk in December 2013 say, my salary will be taxable as it is now? yes.


CTA

"You will become instantly liable to UK income tax on your worldwide income and gains on the date you return."

So does this mean when I come back my salary for the year, I have been in the UAE is taxable??? Confused.

Or does this mean I start paying tax asusall when I start working in the uk again?

I am aware that my uk account will be still paying tax on the intrest gained and money getting sent to it from the UAE for the year is this correct?

Sorry for all the questions but this is all new to me.

Thanks

xylophone

http://www.hmrc.gov.uk/cnr/faqs_general.htm#2nr link from link above - start here. If you are still unsure, ring HMRC for advice or see a tax accountant.

Cook_County

On the facts given you will be UK resident throughout and subject to UK tax on your entire income.

You may save Class 1 NIC if you are not sent overseas by a UK employer, so there would be some tax saving.

baby_frogmella

Yes good idea to open a HSBC bank account in emirates...but make sure you open their Advance account. No monthly fees as long as you deposit min AED 15000 per month. You can then use their Global Access Internet banking to make worldwide transfers to your uk hsbc current account for only AED26 but with excellent exchange rates. Obviously open a HSBC bank account in uk before you leave but well worth it for the savings you will make

jimmo

Beno, your original interpretation of the rules is wrong and, if you are going to gain anything useful from a forum, you will have to accept that and move on with an open mind.

Also, you should not rely solely on any advice you receive here but do your own research to check it out.

In this particular thread we have a prime example.

CTA wrote: »

Technically you will continue to be liable to UK tax throughout the time (in all probability).

However, HMRC will not treat you as a UK resident so long as you are out of the country for an entire tax year AND you don't spend more than 183 days in the UK.

IR20 is the HMRC guidance on this matter (google HMRC publication IR20 -- i can't post a link as a new member) and is particularly helpful.

The effect should be that you will cease to be liable to uk tax on non-uk source income on the date you leave the uk.

You will become instantly liable to UK income tax on your worldwide income and gains on the date you return.

In terms of remitting money to the UK, this should not attract any UK tax issues (maybe some UAE withholding tax but i would doubt it)

If you look at CTA’s public profile you will see that CTA claims to be a Chartered Tax Adviser.

However if you google “
HMRC publication IR20” you should eventually end up on the HMRC website and find that IR20 ceased to be effective in April 2009.

It was replaced by HMRC6. You may want to save time by following the following 2 links.



http://www.hmrc.gov.uk/pdfs/ir20.pdf



http://www.hmrc.gov.uk/cnr/hmrc6.pdf

I claim to be a retired Inspector of Taxes but, for you, that is not important. Check out for yourself what I, CTA or anyone else says.

In my days at HMRC the simplest way for a person leaving the UK to become “Non-Resident” was for the person to leave for a job which would keep him out of the UK for a complete Tax Year. If you look at page 47 of HMRC6 that still seems to be the case. In other words if your new job in Abu Dhabi, starting next month, doesn’t keep you contractually working out of the UK until after 5 April 14 you will not become “Non-Resident” under the special rules for people moving abroad for employment purposes.

Your contract seems to be for 1 calendar year, not even a complete Tax Year so you are barking up the wrong tree.

If, as seems likely, you fail the special rules for employees it becomes a lot more complicated, and, as far as I can see, retention of a home or even a bank account in the UK could be your downfall.

Beno

[/QUOTE]
In my days at HMRC the simplest way for a person leaving the UK to become “Non-Resident” was for the person to leave for a job which would keep him out of the UK for a complete Tax Year. If you look at page 47 of HMRC6 that still seems to be the case. In other words if your new job in Abu Dhabi, starting next month, doesn’t keep you contractually working out of the UK until after 5 April 14 you will not become “Non-Resident” under the special rules for people moving abroad for employment purposes.

Your contract seems to be for 1 calendar year, not even a complete Tax Year so you are barking up the wrong tree.

If, as seems likely, you fail the special rules for employees it becomes a lot more complicated, and, as far as I can see, retention of a home or even a bank account in the UK could be your downfall.[/QUOTE]


Ok so it has to be for one tax year to get the tax free benfits not one callender year, so I would have to say in the UAE till Aprill 2014 to be tax free for a year.

I was under the impression that as soon as you left the uk and submitted your P85, that was when the date started for your tax free year.

Beno

baby_frogmella wrote: »

Yes good idea to open a HSBC bank account in emirates...but make sure you open their Advance account. No monthly fees as long as you deposit min AED 15000 per month. You can then use their Global Access Internet banking to make worldwide transfers to your uk hsbc current account for only AED26 but with excellent exchange rates. Obviously open a HSBC bank account in uk before you leave but well worth it for the savings you will make

Ok that clears the side of the banking. But how does the tax work for sending it to my uk account???

John_Pierpoint

Hi Beno,

I think the simple answer is that you fill in an annual self assessment - perhaps the on-line system works OK from the Gulf ; but have fun if you need to telephone to sort out something - actually come to think of it the overseas telephone number gets answered faster than the 0845 number here in the UK.

Back in the 1970's, before North Sea oil cured the UK's huge balance of payments problems, the tax system positively encouraged UK workers to do an "auf wiedersehen pet" and go abroad to get back the money that had been bled away by high oil prices. You only had to be away from the UK for the UK for enough nights in the year to add up to about 3 months in order to get tax back from HMRC.

You are still in that mind frame.
Despite the latest all time record balance of payments deficit the tax system has not reverted to the rules of the 1970's; in fact it seems to regard ex-pats as some sort of free loading high living class of persons to be tracked and taxed. The reality is that most of the world's expats are now working 7 day weeks and living in dormitories.
For example these contractors manning the ferries:
http://www.channel4.com/programmes/undercover-boss/episode-guide/series-4/episode-6

The USA has always had that sort of attitude towards its citizens; however even in the 1970's places like Kuwait had plenty of ex pats celebrating getting away from their debts and other obligations; untouchable by their home country.
However the fun starts when they are forced to come "home".

http://gulfnews.com/business/4-things-you-need-to-know-about-the-pound-1.1055187
http://gulfnews.com/pictures/news/abandoned-cars-around-uae-1.655965

As Jimmo has already explained, you more or less have to pretend to emigrate to get outside of HMRC's remit. The technique used to be to have a bank account in somewhere like the Channel Islands, but there are now a whole lot more anti secrecy laws and withholding taxes, not to mention money laundering agreements, applying to bank accounts west of Arabia.

If you are to get any income tax advantages from your work in the Gulf, you need a long term contract.