x Abu Dhabi, UAEThursday 20 July 2017

On Your Side: Taking a short trip to UK should not create tax issue

Plus questions about end-of-service payments, health coverage for non-resident UK citizens and more answered by The National's consumer advocate.

Do you know if I would have any personal tax liability if I go to the UK for a business trip? I have a trip scheduled for later this year and expect to spend between 12 and 50 days in the country in total. RM, Dubai

As a resident of the UAE, RM will not become a UK resident for tax purposes by simply visiting the UK for this amount of days. He would need to spend at least 91 days in the country during a UK tax year (April 6 to April 5) to have any liability to UK tax. In this case, there is no cause for concern, especially because his activities are in connection to an overseas business.

 

I moved to Abu Dhabi in 2008 to set up a new office for my company. Until the office was set up here, I was employed by the head company in the UK. Once the branch company had been established, I obtained the appropriate work permit and residence visa. I have since been paid through the Abu Dhabi office, but I have also had pension contributions made on my behalf in the UK. I am shortly due to return to the UK. I am not leaving my company and will be transferring back to it. I am interested to understand the correct procedure for the calculation of end-of-service payment for an individual in my position, or, indeed, if there is an end of service to be calculated at all. MP, Abu Dhabi

Your entitlement to the UAE end-of-service gratuity will, in this case, depend on what is written in your contract of employment. Although UAE Labour Law states that anyone who has been employed for more than 12 months is entitled to an end-of-service gratuity, this can be replaced by pension contributions if this is clearly documented in the contract of employment and agreed by both parties. If MP has been on secondment from his UK employer, which means that the UK company may still legally make pension contributions on his behalf, then it is likely that this pension payment would be deemed to be a replacement for the UAE end-of-service gratuity, especially if the pension contributions were higher. The specific entitlement will depend on the exact wording of the contract, but I suspect that in this case Article 141 will apply, which states: "In any establishment where a pension or security schemes or similar schemes are maintained, the employee who is entitled to retirement pension may select either this latter or the prescribed gratuity or whichever from both thus is more favourable to him."

 

I have been in the UAE for two-and-a-half years, but need to go to the UK for an operation. Can I still be treated under the National Health Service (NHS), or would I have to top up outstanding National Insurance contributions before any procedure can take place? I have heard British citizens who are not residents may have to make a contribution to their NHS surgery. If I am not eligible, would it make a difference if I moved back to the UK, or if I had a property there and was paying tax on that? I have never sent any papers to Her Majesty's Revenue & Customs (HMRC) to say I am not resident. I was born in Britain. KD, Abu Dhabi

If a UK resident leaves the country and is working overseas and not paying income tax, they will generally be presumed to be non-resident for tax purposes, whether or not they have sent the relevant paperwork to HMRC. Because you are not a UK resident, you are no longer eligible for free treatment under the NHS. The payment of voluntary National Insurance contributions counts towards the state pension and has nothing to do with being able to use the NHS as a non-resident of the UK. Although this is what the rules say, it is very much up to the individual health authority to decide if they will charge you for treatment. But I understand that they are tightening up because of the massive cost of running a medical system that is free at point of use. There is, however, a bit of a grey area for people who have been out of the UK for a relatively short period. By this, they mean five years, so you qualify on that point, but would also need to have worked in the UK for a continuous period of 10 years prior to leaving and may have to produce evidence to this effect. Being born in the UK or having previously made contributions has little relevance. The NHS is a "pay as you go" system, so it's your current situation that is deemed relevant.

 

I plan to update my will because I now have assets in the UAE and young children, but I am receiving conflicting advice about whether the documents also need to be translated into Arabic. Is this just a way of someone making more money out of me as the cost for the translation is almost as much as I am being quoted for writing the will itself? I am Australian and intend to eventually return to my home country. BC, Al Ain

For a will to be accepted in the UAE courts, it must be both translated into Arabic and attested, but there is really no need to do this from the outset, especially if you are not intending to remain in the UAE for the rest of your days. The translation can be done if and when required (that is, after death) because this can be a costly process. I would suggest that you ensure that your main beneficiaries and the executors are aware of this requirement.

Keren Bobker is an independent financial adviser with Holborn Assets in Dubai. On Your Side appears every week in Personal Finance. Write to her at keren@holbornassets.com with queries for this column or for advice on any other financial planning matter.

onyourside@thenational.ae