Question: I have effectively retired in Dubai, although I have a small business to generate some income and to have visas for me and my wife.
I have a UK civil service pension, but my wife didn’t work for many years and has a small pension plan.
As we now live in the UAE and don’t pay income tax, can she take her pension income without paying UK tax? She would like to take it all in one if possible.
I think I have to pay UK tax, but can you confirm this as I was told by someone that I could transfer it to an offshore scheme and save tax? DT, Ras Al Khaimah
Answer: The subject of UK pensions, income tax and residency is complex, with many variables, so I can only provide a brief overview here.
DT is in receipt of a UK government pension, what is known as a statutory scheme.
It is not usually possible to transfer from a UK statutory pension scheme to any other non-statutory arrangement and it cannot be done if the pension is already in payment, as is the case here.
Unlike many other arrangements, this pension will invariably remain subject to UK income tax.
The exception is if someone is not British, or has a second nationality and is resident in a country with a dual taxation agreement that permits the income to be taxed in the country of residency.
For example, a Spanish national resident in Spain who received a UK statutory pension could elect to pay the tax in Spain.
This is not the case here as DT only has a British passport.
In respect of his wife, the situation is different as she has a UK personal pension and different rules apply.
There are ways in which a UAE resident can potentially receive a UK pension without income tax being paid or can obtain a refund.
However, this situation is a little easier as the pension in question is worth just £22,000 ($27,595).
As Mrs T is over the age of 55 and the total value of all her pension arrangements is less than £30,000, she can take the benefits under the trivial commutation rules.
This means that she can request for her pension scheme to be paid in one go. Of the total, 25 per cent will be her pension commencement lump sum, which will be tax-free, and the remainder will be taxed at her marginal UK tax rate.
As she is non-UK resident for tax purposes, she can apply to have the full amount paid to her free of income tax or can reclaim any tax deducted by His Majesty’s Revenue & Customs.
Other conditions apply but there is no space to go into that here.
Anyone who wants to encash a UK pension should also be aware that the amount received will then form part of their personal estate for inheritance tax purposes.
Money in a UK pension plan is essentially held in a trust and does not form part of an estate when calculating UK inheritance tax payable on death.
Note that this question is not about the UK basic state pension, which accrues from UK national insurance contributions, and is a different topic.
This is also separate to the Small Pots rules that apply to company pensions.
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Q: My neighbour has two children and they are always playing in the garden, which is fine, but there is constant screaming.
Not just the noise of playing or the odd shout, but the children scream and screech all the time at high volume.
I work from home and also have a baby, so it is very disturbing. I have asked nicely if they can get their children to play a little more quietly, but nothing has changed.
Do I have legal right to get them to be more considerate? PD, Dubai
A: I appreciate that it can be frustrating to have neighbours who do not think about the people living near them.
All residents have the right to live peacefully and people should not adversely bother others.
This is covered in multiple announcements and also in the Dubai Municipality Local Order No. 61 of 1991, Article 74.
It states: “Noise means any noise of such nature that unreasonably interferes with the peace, comfort and convenience of any person, other than a person in or at the premises from which the noise is being emitted. Noise may be emitted by any persons, while attending any gathering or meeting in or at any residential premises or place of assembly.”
If a neighbour fails to respond to a polite request, a complaint can be made to the noise control officer at Dubai Municipality.
Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with more than 30 years’ experience. Contact her at keren@holbornassets.com or at www.financialuae.com
The advice provided in our columns does not constitute legal advice and is provided for information only
