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bigduckontax, Accountant
Category: Tax
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I am negotiating a 28 day on 28 day off contract in the UAE.

Customer Question

I am negotiating a 28 day on 28 day off contract in the UAE. I will still have a house and family in the UK and will be commuting back and forth. I think that the new residency rules mean that I will be taxed on my UAE income,is this correct, and if so what rate, gross amount likely to be £70 to £100 k?. In addition what are the national insurance implications? I have already paid my my 30 years contributions.
If I will be taxed are there any Tax efficient methods to reduce my liability?
I will be paid In UAE Dirhams.
I can set up an offshore account (IOM,Jersey etc) to transfer income out of the UAE, can household bills be paid from this - what are thetas benefits /issues with this?
I am being personally employed but my wife and I are directors of our own UK Ltd company.
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.
The key to UK taxation liability on your UAE earnings is the amount of time spent in the UK on visits. You must ensure that you do not spend more than 91 days in the UK in each tax year. This can be averaged out over four tax years, but most experts are of the opinion that it is better never to exceed the 91 days. If you can so confine your visits then your UAE earnings will not be subject to UK taxation. You could increase your 91 days with your family by having them on holiday in some overseas location and joining them there without passing through the UK. However, if you do 28 on, 28 off your UAE earnings will indeed form part of your UK taxable income.
Directors of UK companies are employees per se and any remuneration therefrom by way of salary must be paid through PAYE. Dividends are subject to the notional 10% y=taxation regime, but do not reduce the company's exposure to Corporation Tax unlike salary.
You may certainly have your UAE income paid offshore and pay bills etc ditto, but that does not alter the tax position if you breach the 91 day rule. Failure to declare such income would constitute tax evasion and this is a criminal offence.
You will be taxed at 20% on the first GBP 31865 of income (assuming that you claim your 10K personal allowance), thereafter your tax rate rises to 40%. If you exceed 100K in a tax year your personal allowance will be reduced by one pound for evey two quid earned until it is completely extinguished. On an income of 70K your tax would be of the order of some 19K. This can be reduced by contributions to a Private Pension Scheme of up to 40K, but this 40K limit includes any employer's contribution within the limit.
As regards ***** ***** you do not have to worry as you are already fully card stamped to use an old expression. Normally an employer on an overseas contract coves the basic element of this for you, but in your case it is unnecessary. Males you a more attractive proposition!
In view of the relatively high income levels involved it might be advantageous to run your proposed situation a local tax professional with experience in this area of taxation with a view to reducing your exposure. A couple of thou might be moneys well spent. However, I am acquainted with chap in precisely your position with an accountant and there is precious little wriggle room.
Sorry to have to rain on your parade. Always remember Benjamin Franklin's dictum that in life there are but two certainties, death and taxes.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3096
Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.

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