How to relocate your life and finances from the UAE to Britain
Former Dubai financial adviser pens repatriation guide to help UK expatriates move home more easily
Relocating your life to your home country might seem like a straightforward move, but think again, says chartered financial planner Simon Cahill.
Moving home is quite an ordeal and there's quite a lot of misinformation.
Simon Cahill, Octopus Wealth
The free seven-part explainer offers a blueprint of how to successfully repatriate from the Emirates and set up your life in Britain once again.
It covers every aspect of the repatriation process from closing up your bank accounts and utility bills in the UAE to shipping your items, moving investments and signing up for bank accounts and insurance in the UK, as well as how to navigate tax and pensions.
To ensure he had a full understanding of the process, Mr Cahill, a chartered financial planner and partner at London’s Octopus Wealth, interviewed 30 British expatriates who have already made the move from the Emirates to Britain to ensure he understood all the challenges they could face.
“Moving home is quite an ordeal and there's a mass of information out there if you're willing to spend the time looking all over the internet, but there's also quite a lot of misinformation,” Mr Cahill, who formerly worked for AES International in Dubai, told The National’s Pocketful of Dirhams podcast.
“It's my job to know what to do on the financial side but for everything else, it was an absolute minefield, so I decided to put a big guide together that will hopefully be a useful and free resource for people moving home in the future.”
Here are the seven steps to take when making the shift from the Emirates to the UK:
Step one: How to exit the UAE
Mr Cahill says the key to successfully relocating from the Emirates is to plan and make a list of what needs to be addressed and a timeline of when it must be done by.
Things to consider include ending a tenancy contract or selling a home, closing utility and phone accounts, paying off debts and closing bank accounts, giving notice to employers and schools and then shipping your belongings and relocating pets.
Timing can be the issue for a number of these, particularly if you need to give a term’s notice to take your children out of school, a notice period to end the tenancy contract on your home, and time to sell your car.
The timeline for clearing debts and closing a bank account is key, as you can only close an account if you have no outstanding liabilities. Most banks insist accounts stay open until 45 days after the closure of a credit card, for example.
Closing utility and phone bills can be relatively straightforward, but Mr Cahill’s advice is to call your provider well in advance to check what documentation and notice period they need.
Dubai’s electricity and water provider, Dewa, for example, will close an account within 24 hours, deduct your final bill from your deposit and then credit your bank account with any outstanding balance. If your bank account is already closed it will wire the money to you in the UK via Western Union.
Step two: How to handle any assets abroad
If you have purchased property in the UAE, you need to decide whether to sell or rent it out as a source of income. Remember, you are subject to income tax on any rental income from overseas properties once you are back in the UK, warns Mr Cahill.
For those with holdings in an investment account, such as a portfolio of mutual funds, stocks or exchange-traded funds held with an offshore brokerage, Mr Cahill says the general rule, depending on the length of time you have spent overseas, is to sell your assets before you repatriate.
“You will not be taxed for realising the investment gain while resident in the UAE, but you may be liable if you still hold it after returning to the UK and realise it at a later date,” he says.
“Sell the investments, move home with cash, and consider the tax wrappers you have available to you as a UK resident before reinvesting.”
Step three: Opening UK bank accounts and buying a home
Keeping a UK bank account open while you are out of the UK makes it easier to take on credit once you return, says Mr Cahill.
This is because it boosts your credit rating, which in turn affects your ability to buy car insurance, access better rates on credit cards and secure a mortgage.
If you do not have a bank account, Mr Cahill says digital-only banks, such as Monzo, Revolut and Starling, are efficient and easy to use.
For those still resident in the UAE, Mr Cahill advises opening a UK bank account at least a year before repatriating, even if you need to use a relative’s address.
If you need to rent a property when you first return, most letting agents will need a reference from your previous landlord so make sure you stay on good terms with your UAE landlord.
They will also run a credit check, which may cause problems if you have been away for some time and do not have a financial footprint in the UK.
Some families moved back into Airbnb accommodation on their return to get around this “because these landlords were more flexible”, says Mr Cahill.
For those looking to buy a property, some people wrongly assume they need to have worked in the UK for at least six months and have payslips to prove it before they can take on a home loan. As long as you have proof of employment, you can access a mortgage.
One stumbling block, however, is the source of your deposit, particularly if you have moved a lot of money from the UAE, so Mr Cahill advises sourcing digital and hard copies of bank statements documenting how money has left the UAE and entered the UK.
“The UK has very strict rules on this to prevent money laundering which can make things slightly difficult at times for returning expats,” says Mr Cahill.
Step four: Paying tax in the UK
While the UAE is a low-tax country to live in with only value-added tax to consider, this is not the case in the UK, where you also need to factor in income tax, capital gains tax and inheritance tax.
The UK fiscal year runs from April to April, so if you enter at any other point in the year, you will effectively split the tax year, which means British tax rules are applied from the point you are considered a UK resident once again.
Different scenarios dictate when you are considered UK tax resident, such as when you establish your only home in the UK, when you start full-time work or when you cease full-time work overseas and move to the UK.
“Split years are a very complex area of the Statutory Residence Test and each situation is different which is why there is a need for you to take advice on this,” says Mr Cahill.
“Getting this wrong could land you with a large tax bill at a later date. I recently spoke to someone who did not take advice and was subsequently landed with an unexpected tax bill of £32,000 after returning to the UK.”
Remember the rate of income tax you pay depends on your level of income, with any assets held overseas also liable.
“Income tax can be charged on earnings from salary, bonuses, investments, property income, savings income as well as certain other areas,” says Mr Cahill.
You must make National Insurance contributions, which provide access to a number of benefits such as a state pension.
In addition, if you sell any investments once you are onshore, you will be subject to capital gains tax - a tax on the profit you have made from the investment, minus the purchase and sale costs.
“If you have acquired assets while in the UAE, whether they’re held in the UAE or in places like the Isle of Man or Jersey, you may not be liable to UK CGT if they are disposed of before you become a UK resident again,” says Mr Cahill.
Therefore selling a sizeable asset such as a home before you return to the UK could be beneficial, he adds, to ensure you avoid a large tax bill.
Step five: Retiring to the UK
While your retirement age depends on your personal choice, those with a UK workplace pension can only start drawing their pension benefits at 65.
To receive a state pension, men and women must both be 66 with the maximum payment currently £175.20 ($243.84) a week or £9,110.40 a year, depending on how long you have worked in the UK or contributed to National Insurance.
If you have not made NI contributions while overseas, Mr Cahill says you can make voluntary contributions at any time to plug any gaps.
Step six: What to organise on your return
First, make sure you are still listed on the electoral register by contacting your local council. This not only allows you to vote but it is another way to boost your credit rating.
For those with children of school age, you need to live in the right catchment area for your chosen school so decide where you plan to live before you return unless you opt for private education.
Private schools charge similar rates to some UAE schools with prices ranging from £15,000 to more than £40,000, depending on whether the child is a day or boarding pupil and the quality of the school.
Next, get yourself registered with your local medical practice. Healthcare is free in the UK but the National Health Service can be slow, warns Mr Cahill, so you may want to consider private medical insurance if your employer does not offer it.
Remember to gather any important medical notes from your UAE healthcare providers before you exit to ensure continuity of care.
Step seven: Getting financial advice in the UK
For those that enjoy rebalancing investments and designing future cash flow or tax strategies, there is no need to seek financial advice in the UK, says Mr Cahill.
But for those that need to understand the most tax-efficient way to invest their money, then advice will help, with £250,000 of investible assets roughly the amount at which most people seek help, he adds.
The UK’s investment market, which has more than 5,000 advice firms and more than 27,000 advisers, according to the Financial Conduct Authority, has been plagued by financial scandals over the past few decades, ranging from the sale of endowment mortgages and pensions to the mis-selling of payment protection insurance.
The FCA has since made a number of revisions and in September, it issued a “call for input” to the country’s consumer investment industry as it looks to overhaul the scandal-hit sector once again.
Mr Cahill says good financial advice should be centred on what you want to achieve in life rather than product-related conversations linked to which pension, insurance or tax wrapper you should choose.
One issue Mr Cahill regularly sees is former UAE residents with underperforming contractual saving plans or lump sum investments known as offshore bonds.
Provided by global insurance companies and sold by UAE financial advisers, these expensive products have been heavily criticised in the past due to the vast array of fees associated with them that make it difficult to achieve growth.
Mr Cahill says these types of policies “were outlawed in Britain years ago” so it is wise to get advice from a UK-based adviser on how to handle them before you repatriate.
Updated: February 23, 2021 09:42 AM