'Will I need to pay tax in UK if I rent out my Dubai apartment after relocating to Scotland?'

The amount of rental profit can be reduced by offsetting certain expenses. Getty Images

Question: We plan to leave Dubai next year to move back to Scotland. We own an apartment and were thinking about selling it but now, I think we will keep it and rent it out. My question is if we will have to pay any tax in the UK if we make any money from it.

We thought we’d just leave the money in a bank account in the UAE and use it when we visit. Do we have to tell anyone in the UK about it? JT, Dubai

Answer: Tax issues are complex so I can only provide a brief overview here. Personal advice should always be obtained.

Someone who is UK resident for tax purposes is subject to UK income tax on their worldwide income. That means that any rental income from a property in the UAE will be taxable in the UK, no matter where it is paid. It does not have to be sent to the UK to be subject to UK tax.

If someone has income in addition to that from employment, it must legally be disclosed to HMRC, His Majesty’s Revenue and Customs, by way of a self-assessment tax return.

Failure to disclose income, from any source, is tax evasion, which is a crime and subject to substantial penalties.

The amount of rental profit can be reduced by offsetting certain expenses such as agency and management fees and some maintenance and repairs. Proper records must be kept as evidence may be requested.

In addition, JT should be aware that if the property is sold when he is resident in the UK, any profit will be subject to capital gains tax. A few expenses can be deducted and there is a small annual exemption of £3,000 ($3,845) per person. Above this, the rates of tax for capital gains are 18 per cent for basic rate taxpayers and 24 per cent for higher rate taxpayers, which also applies if the capital gain pushes a person into a higher rate tax band.

There are numerous tax considerations if anyone is leaving the UAE, or the wider GCC, to move to the UK, so expert advice should always be sought.

Q: I have a full-time job but I have been working on my hobby and doing a bit of paid work on the side. My boss knows about this and my hobby has no connection to the company, so there is no issue with competition.

My question is whether my bank is likely to cause a problem if I receive payments that are not through the WPS (Wages Protection System) from my employer? LB, Dubai

A: There is no reason why the bank should have a problem with the additional payments but banks will sometimes ask about the source of funds for compliance reasons.

The UAE Central Bank has procedures in relation to anti-money-laundering regulations but any questions should be simply to confirm the legality of the payments and the source. Ad hoc small payments are unlikely to raise suspicion but if questioned, it will be as part of standard checks and LB should simply answer honestly.

To run any kind of business in the UAE, a suitable trade licence is required. As LB already has a Dubai visa, and is simply selling a service or consulting, the easiest and cheapest option will be a DED (Department of Economic Development) e-trader licence. This has an annual fee of Dh1,070 ($290).

An application can be made online via https://dedcafe.ae/service/e-trader-license/or in person at the DED cafe in Palm Strip Mall, Jumeirah Beach Road, Jumeirah 1.

Provided the total gross income is less than Dh375,000 a year, LB does not need to register for VAT or complete quarterly returns.

Q: Is there a minimum salary in the UAE? I heard that’s the case but can’t find any information. I worked in Qatar before and there was a minimum salary there, but now I am looking to apply for a job in the UAE. CK, The Philippines

A: While there has been discussion about introducing a minimum salary in the UAE, labour law does not stipulate an amount. The UAE government expectation is “that salaries must cover basic needs of the employees”.

In 2013, the Ministry of Human Resources and Emiratisation set out guidelines for different types of workers.

These are: Dh12,000 ($3,270) for university graduates, Dh7,000 for skilled technicians and a minimum wage of Dh5,000 for skilled labourers with a secondary school certificate. These sums are not enforced but companies are expected to follow the guidelines.

There are also agreements between a few foreign governments and the UAE. For example, the Filipino and UAE governments have set the minimum monthly salary for overseas foreign workers at $400.

Qatar has a minimum wage that, for 2024, is set at 1,000 rials ($274.72) per month plus a housing allowance of 500 rials 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’ experience. Contact her at [e-mail] at www.financialuae.com

The advice provided in our columns does not constitute legal advice and is provided for information only