babylon

I am in discussions with my employer about transferring to the Dubai office of our firm. It has been mentioned that I will get a re-assignment/local contract and I need to consider the tax implications of moving mid tax year.

I have read all posts and my understanding is that if I move out of the UK, say in December 2015 and do not return before April 01 2016, I will not be liable for taxes for the income earned outside the UK. Is this correct? If not, is there something else I should be thinking of? I have looked at gov.uk and HMRC website, but I left even more confused.

I have searched online in detail and I cannot find the difference between a re-assignment or local contract and an expat contract. Does taking a local contract mean, I will not get the typical type of benefits anticipated - schools, transport, housing? I have also read that 'expat' contracts as such are no longer common. I am weighing up all options before I make a decision if this is a potentially good move for us. Has anyone had this issue? Can some clarity be provided?

archie159

For the last bit of your question... you need to ask your current employer these questions, not us. Some local contracts will have those benefits, some won't - it'll be between you and your employer to discuss that.
When people say "expat contracts are no longer common", what they mean is that more and more people get contracts where many of the benefits are wrapped up in one monthly payment, and it is up to you how you spend them - as opposed to (say) getting a lower salary (maybe similar to your UK salary), but getting housing provided free, electricity paid, local living allowance etc. If you don't splash out, having the larger monthly payment but fewer ring-fenced allowances can work to your benefit.

Johnnyboy11

If you leave the UK to work full-time overseas, your become provisionally UK Non-resident, so pay no UK tax or NI on your worldwide earnings. However, you are still liable for both until you are confirmed UK Non-resident. The easiest way to achieve this is to work full-time overseas for a full tax-year and limit days visiting or working in the UK. So 6th April 2017 at the earliest, a critical date for you. HMRC operate a split-year concession for the year you leave and the year you return, which only applies if you are confirmed UK Non-resident i.e. you complete the full tax-year. Changing employers, gaps in employment, part-time working in the UK etc. can be problematic and HMRC might challenge your full-time working overseas status. There is little job security in the ME and a lot of expats arrive and leave before working a full-tax year, and have tax liability they didn't budget for.

Search the internet for "UK Statutory Residence Test Flowchart" and take your pick.

TopNik

Hello babylon,

Please be aware that split year rules include residence conditions for the following tax year after your return to the UK also.

If you do not meet these conditions you will not be entitled to split year treatment and your earnings prior to your return to the UK will be liable for UK income tax.

babylon

Thank you very much for the detailed information. I have been doing research and will update once I get numbers. Thank you

So if I understand it, should I leave the UK in say January 2016, I will not be liable for taxes for the period Jan - April 2006, on the condition that I do not return to the uk during this time even for a few days. Is this correct?

Johnnyboy11

Nope - If you leave in January 2016 you will need to work full-time overseas until 6th April 2017, whilst limiting your visits and working days in the UK. Otherwise you will not have worked a full tax year overseas and therefore you remain UK resident for tax purposes throughout.

scot47

Watch out for part years. I remember a friend of mine who went to Saudi and worked there for a few months. He broke his contract and came back to the UK. Some time later he got a bill from HMRC for income tax due on his earnings overseas.

TopNik

This is why tax planning is so important.

If consultancy work is carried out based on an individuals personal circumstances prior to a decision being made then in most cases a simple change of date of return to the UK can be of great significance.

Obviously there are many cases where there is no choice but to return immediately due to personal circumstances but in others it still amazes me that rather than pay a small charge to determine the various options available many will take the risk then end up facing a tax liability of thousands upon their return

Standanista

Hi. As Johnnyboy11 says, no. If you leave in January 2016 you need to work full time overseas till April 2017 to avoid tax, in a nutshell. Visits to the UK can be fitted in but the more connections you keep with the UK (property, spouse), the less time you can spend there in the meantime if you want to avoid tax.

You need to understand the HMRC rules, all spelt out on their website, plus check out their calculator.

babylon

hi
Thanks all for the detailed feedback on tax and i am now clear on what i need to do.

i have now got the first offer from the company at 28000AED/mth all inclusive (spouse, one 5year old kid) and i am weighing it up before i revert back to them. Initial impressions, using the Is it Worth It Calculator is that it does not look too good. Any comment on this? where best to stay in Dubai at affordable rents. I have seen posts about SCAMP going through numbers. Is it worth it at this rate?

archie159

It's not a great salary, but not knowing what you actually do (nor what qualifications you have) it's hard to say.

Don't forget that your child will now incur school fees, which are not cheap; as a very minimum, try to negotiate a school fees allowance on top of this. Also check that full medical insurance will be provided for all of you. What about flights home annually?

Tell us what you do, qualifications, experience etc, and we can maybe say whether the 28k is good/average/poor for your role.

babylon

Archie

Current in the uk is around 48.7k with all the standard benefits

On offer
28k aed all inclusive-basic & allowances (11.2k aed)
Full medical for all family
Annual Return flights for family . Not in the 28k
Gratuity at the end

The figure looks on the low side and we are looking To have a very modest lifestyle and save a bit. School fees would be around 42-47k aed.

Accommodation expectations - south of Dubai airport and east of sheikh zayed road. Avoiding the west side as rents will be high but I would welcome opinions. Good value rents in Sharjah but I am likely to spend more time commuting.

Ideal place will be a good neighbourhood close to good school (price range above) but I am unsure which one yet.

Modest family car-4x4 something like a Nissan Juke or Mitsubishi of thAt size. One car would do initially As I understand Dubai public transport is ok and not too bad. Is this fair assumption or we should be thinking of a two car household.

Do the numbers add up? What should be the typiCal expection?



Package on
Flights home are include

archie159

I can't discuss the Dubai issues, as I live in Abu Dhabi.

Otherwise, my instant (gut-feel) response is that it is not enough. Once you factor in the school fees, it seems to me that you will have an annual salary almost the same as you have now. The only gain is that it'll be tax-free, but cost of living here can be quite high unless you are very self-disciplined, and there are a lot of unexpected extras most people don't budget for. Whereas in the UK there are a lot of relatively low-cost ways of keeping children entertained, here you find you end up paying for a lot more - especially in the hotter months. If you are happy where you are, then I'd feel it is not worth it. If you are seeking a change in life, an adventure etc, then maybe... but I'd definitely try to get some more. As I said before, at the very least try to get a school-fees allowance included - but I'd probably try to ask more money also. See what others say...

babylon

Archie thanks for the quick reply and useful feedback. I would not get school fees at my grade initially as this is a company wide policy. But I am hoping I can negotiate basic/allowance up, play hard man or just refuse to take it. I will wait for comments from members in Dubai before I decide.

Millhouse

It's not enough - add about 20k to it.