Expatriate Britons can transfer money to their mortgages without being taxed, but they must not exceed their 90-day limit to qualify.
On Your Side: Non-residents can send money to UK without paying tax
Q: I am registered as a non-resident with the UK's HM Revenue & Customs for tax purposes. I have been told that all the money I earn while I am in the UAE is tax free if I don't return to the UK for more than 90 days per year and stay out for at least one full tax year. However, is it a good idea for me to send money to my UK bank account every month to repay my mortgage in big lumps? Is there any danger that this money may be liable to tax and, if so, is there another way you could recommend that I pay into my mortgage account? BB, Abu Dhabi
A: Because you are a non-resident in the UK during the current tax year, you will not be taxed on any monies you remit provided they are earnt overseas and you do not exceed your 90-day limit this tax year (April 6, 2010, to April 5, 2011). Fortunately, you moved to the UAE at the end of March last year, just before the end of the tax year. This has simplified your situation because you did not have to concern yourself with a partial tax year. You will only have a potential liability if you return to the UK during a tax year, having spent less than five full years overseas. In this scenario, you could be subject to UK income tax in that final year, depending on when you return and the total time you have spent in the UK, averaged over the previous four years. Provided you are only sending income, and not capital, back to the UK, you will not be liable to income tax there. If your UK property is leased, you could be liable to tax on that income if it exceeds the amount of your personal allowance - £6,475 (Dh38,060) in the current tax year. This income must also be reported to HM Revenue & Customs.
Q: I read with interest your reply in the January 15 issue of Personal Finance to an expat's query regarding retirement age. You stated that the law was changed on January 1, which raised the retirement age from 60 to 65. Is there any way I can obtain a copy of this law? My husband has just had his passport returned to him with a one-year visa in it and has been told by his company that he has to leave when it expires in January next year due to the retirement age being 60. Having read various articles online, I can see this is not true and we wish to contest his company's decision. However, we feel we need something to back it up and a copy of that law would help immensely. AW, Dubai
A: I have spoken to the Ministry of Labour for confirmation and the rules have definitely been changed. This is a procedural change, so no formal legislation is being issued and the ministry has yet to update its website with the information. It may be that the people handling your husband's visa renewal were not aware of the changes because they have not been well publicised. My understanding is that one-year visas can be issued once someone reaches the age of 60, but it is now possible for expats to have a standard two-year visa up to the age of 65. I have asked for written confirmation from the ministry, but have been told that there is nothing they can give me. However, it said companies or individuals can obtain verbal confirmation either by telephoning the ministry or visiting one of its offices.
Q: I have been in the UAE for just over two years, but have been paying into a UK pension while I have been here. Could you please confirm that I am OK to do so? I had originally intended to stay here for just a couple of years, but not expect to be here for at least another five years. I am currently paying £250 a month to a plan I have had for more than 10 years. GH, Sharjah
A: In most cases, only limited ongoing contributions can be made to a UK pension plan if the person is a non-resident. Provided a personal pension or stakeholder pension scheme was already in force at the time of your departure from the UK, you may continue to make contributions of up to £3,600 gross per annum for up to five years after your departure. Basic rate tax relief is available at source, so the amount you may pay is £2,880 per annum, but the tax relief assessed at source means the amount credited to the plan would be £3,600. This equates to a next payment of £240 per month, but because you are paying slightly more than this it would be easier to reduce your contribution. Some companies will allow additional payments, but no tax relief would be available. After the initial five-year period of non-residency has expired, contributions should cease. Different rules apply to company pension schemes.
Q: I work for a company in Media City, which is a free zone. I am not happy at my company and want to change jobs and have had an offer from another company that is also based in Media City. I don't really understand the employment law here and have been told different things by friends. Some say I will get a six-month ban because I have only been in the job for nine months; others say it won't be a problem. I don't want to hand in my notice until I am sure about the situation. ST, Dubai
A: The good news for you is that if you change jobs within the same free zone, you will not be subject to a labour ban. This only applies within the same free zone and not if someone moves from one free zone to another. This is because the free zone is the sponsor rather than the employer, which means the sponsor does not change.
Keren Bobker is an independent financial adviser with Holborn Assets in Dubai. Write to her at email@example.com with queries for this column