Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with more than 30 years of experience.
Question: We plan to leave Dubai next year and move back to Scotland. We own an apartment in Dubai and were thinking about selling it, but now we’re considering renting it out. My question is, will we have to pay tax in the UK if we make any income from it?
We thought we’d just keep the money in a bank account in the UAE and use it when we visit. Do we need to tell anyone in the UK about it?
JT, Dubai
Answer: Tax issues can be complicated, so this is just a brief overview. It’s always a good idea to get personal advice.
If you are a UK resident for tax purposes, you are required to pay UK income tax on your worldwide income. This means that any rental income from your property in the UAE will be taxed in the UK, no matter where the money is paid. It doesn’t have to be transferred to the UK to be taxed.
If you have additional income (like rental income) apart from your regular employment, you must legally report it to HMRC (His Majesty’s Revenue and Customs) through a self-assessment tax return.
Not disclosing income from any source is considered tax evasion, which is a crime and can result in serious penalties.
You can reduce the amount of rental profit that gets taxed by subtracting certain expenses, such as agency and management fees, as well as some maintenance and repair costs. You must keep proper records because you may be asked to provide evidence.
Also, JT should know that if you sell the property while you are living in the UK, any profit you make from the sale will be subject to capital gains tax. You can deduct certain expenses, and there is a small exemption of £3,000 ($3,845) per person. If your capital gain exceeds this amount, the tax rates are 18% for basic rate taxpayers and 24% for higher rate taxpayers. This higher rate applies if the capital gain pushes you into a higher tax band.
If you’re leaving the UAE or any GCC country to move to the UK, there are many tax considerations, so it’s important to seek expert advice.
Question: I have a full-time job, but I’ve been doing some paid work on the side related to my hobby. My boss knows about this, and there’s no competition between my hobby and my job.
I’m wondering if my bank might have an issue if I receive payments that aren’t through the WPS (Wages Protection System) from my employer.
LB, Dubai
Answer: There’s no reason why the bank should have an issue with the extra payments. However, banks sometimes ask about the source of funds for compliance purposes.
The UAE Central Bank has rules to prevent money laundering, so if the bank asks about the payments, it’s just to confirm that they are legal and from a valid source. Small, one-off payments usually don’t raise suspicion, but if the bank asks, it will be part of standard checks. LB should just answer honestly.
If you’re running a business in the UAE, you’ll need a proper trade licence. Since LB is offering a service or consulting, the easiest and cheapest option would be a DED (Department of Economic Development) e-trader licence. This costs Dh1,070 ($290) annually.
Applications can be made online at https://dedcafe.ae/service/e-trader-license/or in person at the DED cafe in Palm Strip Mall, Jumeirah Beach Road, Jumeirah 1.
If your total gross income is less than Dh375,000 per year, you won’t need to register for VAT or submit quarterly returns.
Question: Is there a minimum salary in the UAE? I’ve heard there’s a minimum salary, but I can’t find any information. I worked in Qatar before, where there was a minimum salary, but now I’m looking to apply for a job in the UAE.
CK, The Philippines
Answer: While there has been talk about introducing a minimum salary in the UAE, the country’s labor law does not specify a set amount. The government expects salaries to meet employees’ basic needs.
In 2013, the Ministry of Human Resources and Emiratisation provided guidelines for different types of workers:
- Dh12,000 ($3,270) for university graduates
- Dh7,000 ($1,900) for skilled technicians
- Dh5,000 ($1,360) for skilled laborers with a secondary school certificate
These guidelines are not strictly enforced, but companies are expected to follow them.
There are agreements between the UAE and a few foreign governments, like the Philippines, which set a minimum salary for overseas workers. For example, the UAE and the Philippines agreed on a minimum monthly salary of $400 for Filipino workers.
In Qatar, the minimum wage for 2024 is 1,000 rials ($274.72) per month, plus 500 rials for housing and 300 rials for food.
Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with more than 30 years of experience. Contact her at keren@holbornassets.com or at www.financialuae.com.
Note: The advice provided here is for information only and does not constitute legal advice.
