x Abu Dhabi, UAEWednesday 26 July 2017

On Your Side: Clear credit-card debts to avoid legal action

Plus advice on UK Individual Savings Accounts, leaving a job before the end of a limited-term contract, inheritance taxes and more from The National's consumer advocate.

I lived in the UAE for three years, but during the recession I went back to my home country. At that time I had a credit card and I missed a number of payments. After a few e-mail reminders from the bank, including a warning of a "legal procedure", I paid the full outstanding amount with interest and late payment charges. On demand from my end, the bank issued me a private letter stating nothing was due, but I am still not sure about the legal case. Can there be any legal case after the bank has issued a no-due letter? MS, India

MS had a credit card with First Gulf Bank. He was concerned that because of the late payment of the debt, there might be a police case registered against him, which could cause a problem if he returned to the UAE. However, First Gulf Bank says: "Please notify MS that his card is closed and there is no legal action taken by collections."


I am a Filipino passport holder and have worked for an Abu Dhabi-based company as an auto painter from 2010 until now. My visa is a three-year visa. But, as we all know, the UAE Labor Law changed in 2011 and two-year visas are now issued. Is it possible for me to go to another company since I've already completed two years at my company, or do I need to finish my three-year contract? What are the documents I need if I can transfer to another company? Do I need a No Objection Certificate or release papers from my company? HC, Abu Dhabi

HC is on a limited contract, which is for a three-year period. The relevance of the timing relates to the employment contract and not the dates on a visa. Because he has agreed to a three-year contract, he can be penalised by his employer if he leaves before the end of the three-year period. The penalty would depend on the exact wording in the contract that HC signed, so he should check this. An employee can leave at the end of a limited contract without penalty provided they have given proper notice that they do not want to renew. In this situation, the employee will not receive an employment ban. Residency visas are now issued for a two-year period instead of three years, but that does not change any other factors of the UAE Labour Law.


My husband is being made redundant and has been given 30 days' notice by his employer, per his employment contract. He has not taken much holiday time over the past nine months and so has seven days owing to him. The employer has suggested that this forms part of the 30-day notice period. This doesn't seem right, but I would like to know if they can force him to do this. BH, Abu Dhabi

The short answer is no. If an employment contract requires 30 days' notice, then any days of annual leave accrued are separate to this. While an employer can determine when leave is taken, in this situation he cannot be forced to take it during a notice period. An employee is legally entitled to a certain number of days off per year and if days have been accrued and are not taken by the time service ends, the individual should be paid in lieu.


I know that you have previously answered queries about paying into a UK pension and wondered if there was a similar ruling for paying into a UK Individual Savings Account (ISA). I am in my second year of living and working in the UAE and I am registered with Her Majesty's Revenue & Customs (HMRC) as a non-resident for tax purposes. However, I pay UK tax on my military pension and also on income from a UK property that is leased. I will be moving back to the UK in a few years' time. When I moved here, I was paying £100 (Dh581.85) a month into an ISA. I understand that I cannot open another ISA, but can I continue to pay into my existing ISA or increase the payments? TA, Dubai

Under HMRC rules, you must be a resident of the UK for tax purposes to be eligible to invest in an ISA, a UK specific tax-efficient savings scheme, of any type. The only exception is for crown employees or military personnel and their spouses. Because you are a UK non-resident, you should not be making any ISA contributions and any that have been made while you have been a non-resident should be refunded to you. You should notify the providers of your status. Any ISA plans that you set up and contributions that you made before you became a non-resident may continue and will retain their tax-free status. If you return to the UK and become resident again, you can restart contributions, subject to the annual limits.


My mother is a widow and because she is getting on in years, she has moved to a smaller property in the UK. She is financially comfortable and has decided that she would like to give £30,000 (Dh172,554) to both my brother and me. I have read that there could be an Inheritance Tax charge should she die within seven years, but I am concerned about having to pay income tax on the amount received because I am due to return to the UK shortly to start a new job. JB, Abu Dhabi

You are correct in stating that gifts of cash or assets are potentially liable to Inheritance Tax if the person making the gift dies within seven years of doing so. This is on a tapering basis over the period. You should, therefore, ensure that you have a proper written record, such as a letter to you and your brother from your mother confirming when the gifts were made. Her Majesty's Revenue & Customs does not treat a gift of cash as income, so you will not be liable for income tax on the lump sum received regardless of where you are living at the time.

Keren Bobker is an independent financial adviser with Holborn Assets in Dubai. Contact her at keren@holbornassets.com or onyourside@thenational.ae.