The current health crisis will have far reaching consequences, in almost every aspect of our lives and it’s likely to accelerate a wide range of trends. There are many reasons why, but chief among them seems to be the threat to health. Anything that threatens our longevity, tends to focus our attention on both short and long term plans.
Most foreign nationals currently living and working in Dubai, will not remain in the principality permanently. Many of us are here to work, live and enjoy life, before we return to our origins, or head off to new horizons. When we finally overcome the health crisis and collectively turn our attention to the financial crisis it has caused, we might find our long-term plans becoming medium or even short-term ones.
From a financial planning point of view, moving from a largely tax-free environment, to a taxed one often has its complications and early planning is essential if you want to avoid costly mistakes. We have advised a number of clients, where they were sold investment bonds which were established as Executive Bonds (to hold direct equity investments). No problem while in Dubai, but a big problem if you return to the UK and realise HMRC will assume an arbitrary 15% per annum growth and tax the proceeds of the bond as income. This kind of thing can be resolved while you are still in Dubai, but it’s a real mess if you’ve already returned to the UK.
Similar examples apply to other investments, destinations and tax jurisdictions. There are some tax structures, if implemented early on in ones Dubai residency, can allow for and enhance future tax benefits once you’ve left the UAE. Time spent undertaking some financial planning and in particular, establishing your long-term goals and plans, can help to reduce or eradicate unexpected and largely unnecessary tax payments. If those long-term plans become short-term one’s, the time available to resolve issues prior to departure can become a constraint.
If you’d like to discuss this or any other issue, we are offering free consultations to anyone who is concerned about their investments. There is no need to become a client of Abacus, you can just follow the link below and send an enquiry. We will be happy to help if we can.
By Kay Pindoria
Executive Partner & Financial Consultant