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Abu Dhabi, UAEMonday 25 June 2018

"Do I have to pay tax on UAE income when I return to the UK this summer?"

The Abu Dhabi resident wants to know how to lessen her tax liability when she returns home 

British expats must check their tax status before returning home to assess whether they are liable. Sukree Sukplang / Reuters
British expats must check their tax status before returning home to assess whether they are liable. Sukree Sukplang / Reuters

I am a teacher and have been in my job in Abu Dhabi since August 2017. I have a one-year contract that I will not be renewing as I want to go back to the UK. My question is about having to pay tax in the UK when I go back. If I stay in Abu Dhabi until August of this year, can I avoid paying tax in the UK? What if I go and spend the summer in Spain before returning to the UK? I have been given very different advice by friends and just don’t understand the situation so can you confirm? TM, Abu Dhabi

Under UK law, as set out by Her Majesty’s Revenue and Customs (HMRC) the organisation that oversees and manages all issues relating to UK taxation, TM will not be exempt from UK income tax on her UAE income. Any individual must spend a full tax year out of the UK to be considered to be UK non-resident and thus to have any exemption from UK income tax on their overseas income. A UK tax year is April 6 to April 5. Various criteria apply, as covered in the Statutory Residency Test, which came into effect in 2013, and specifies the number of days in a tax year that anyone can spend in the UK to retain their non-resident status. This will vary between 45 and 183 days depending on individual circumstances. Partial tax years outside of the UK, even if there is also a full year out, may also be taxable but that depends on various other conditions applying. These include the reason for moving country, whether the move is for a job, and availability of accommodation. This is the Split Year Concession, note a concession not a rule, and professional advice should be taken if anyone thinks this could apply them. To clarify, if TM stays in Spain for a while it will make no difference to her UK tax liabilities.

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I have seen previous articles where you have answered questions about repatriation and who pays for flights when leaving a job but my situation is a bit different. I am coming to the end of my two-year contract and will be moving to a different company in Abu Dhabi. My current employer offered to ship my belongings back to my home country, but as I am not going back can I ask my them to pay for my storage until I start my new role. JK, Abu Dhabi

The responsibilities of an employer, in respect of repatriation, is set out in Article 131 of UAE of UAE Labour Law. This states: "The employer shall, upon the termination of the contract, bear the expenses of repatriation of the worker to the location from which he is hired, or to any other location agreed upon between the parties. Should the worker, upon the termination of the contract, be employed by another employer, the latter shall be liable for the repatriation expenses of the worker upon the end of his service… Should the reason of the termination of the contract be attributable to the worker, the latter shall be repatriated at his own expense should he have the means therefore."

In this situation, as JK will be remaining in the UAE the current employer is not responsible for paying for her flight back to her home country and this responsibility will transfer to her new employer. Unless a contract of employment states otherwise, neither employer has any responsibility for the storage of any personal items.

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I am being made redundant from my job and although I have found a new position, there will be a space of three weeks between finishing this role and starting my new job. My worry is that I won’t have any medical insurance and I can’t find any company that will allow me to take cover for just this amount of time. Is there a solution for this problem, which must affect lots of people? RM, Dubai

No insurance company in Dubai will provide cover for this short a period as it is just not financially viable. The good news, however, is that your current employer must keep you on the company insurance for a period of 30 days after your visa has been cancelled. This requirement came into effect in November 2017. A circular issued by Dubai Health Authority, General Circular Number 5 of 2017 (GC 05/2017), said: "As stated in ‘General Circular 09 of 2016’ pertaining to individual refunds, we had stated that individually sponsored domestic helpers must be covered for 30 days after the cancelation of the policy. Going forward the same requirement will apply to all members insured under group policies. Therefore, for a group policy with a 1st January 2017 inception date, and a 31st December 2017 expiry date, if a deletion request was sent on June 1st 2017, the member would be covered until July 1st 2017. However if a deletion request was received on the 15th of December 2017 the member would only be covered until expiry of the policy. The cover required post deletion date must at minimum cover emergency expenses. It is encouraged however to maintain the existing benefits, terms and conditions." In the majority of cases departing employees will remain insured for 30 days after leaving employment.

Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with over 20 years’ experience. Contact her at keren@holbornassets.com. Follow her on Twitter at @FinancialUAE.

The advice provided in our columns does not constitute legal advice and is provided for information only.