Dubai resident questions income tax liability on UK bond
I am a UK national by birth and have resided in Dubai for the last 10 years. During my time here I took out an Offshore Investment Bond with a provider in the Isle of Man. If I surrender the bond while in Dubai I presume I will not pay any income tax on my gain? However, I am soon to move to Spain, with two months to be spent in the UK in between. If I surrender my bond when I am living Spain will I be liable to pay UK tax? WA, Dubai
To determine whether there is any UK tax liability on the surrender of your offshore investment bond, your residence status should be checked to ensure that you are not treated as being UK resident and that the bond does not create any UK tax liability on you. If the bond was taken out at a time when you were not UK resident and it is with a non-UK provider and treated as a non-UK asset – which applies to an offshore investment – and you have not been resident during the period of ownership and you are not UK resident when you encash the bond, no UK tax liability should arise. This does not mean that there would not be any liability once you are resident in Spain, but I would advise you to seek advice from a tax professional with expert knowledge of the Spanish tax system.
Keren Bobker is an independent financial adviser with Holborn Assets in Dubai. Contact her at firstname.lastname@example.org
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Published: May 20, 2014 04:00 AM