'Will my ex-husband's maintenance payments be taxed in the UK?'

The Abu Dhabi resident plans to move back home with her children following the breakdown of her marriage

The Briton's former spouse will send money each month to help support his family. Photo: Bloomberg
The Briton's former spouse will send money each month to help support his family. Photo: Bloomberg

My husband and I are separating with the intention of eventually getting divorced. He plans to stay in the UAE, possibly permanently, but my children and I will be moving back to the UK in the next few months. It has been agreed that he will send money to my UK bank account every month to support the children and pay towards my bills. It is unlikely he will spend more than a couple of months in the UK each year to visit the children. Does this will make a difference to the payments he can make to me? Someone told me the laws had recently changed and he could be taxed on the money he sends if I am residing in the UK. Has the tax situation changed for a case such as ours? EP, Abu Dhabi

The UK operates a system of independent taxation for married couples, so you will each be treated separately in respect of liability for UK taxes and your tax residency. You will be deemed UK resident once you move back to the UK but he will keep his status as UK non-resident for tax purposes. This means he can send his UAE income to the UK without it being liable for UK income tax.

There have been no recent changes in the tax rules for British expatriates, nor have any been announced. The rules last changed significantly in April 2013 when the Statutory Residency Test came into effect and clarified the number of days people can spend in the UK before becoming liable for UK tax, based on certain circumstances and what are known as ‘connecting factors’. The previous guideline of 90 days is no longer relevant and many people have found they can spend more time in the UK than before without jeopardising their tax status, although the rules can be stricter if carrying out work in the UK.

I was recently terminated from my position at a school in Dubai due to budget cuts. I was halfway through my current limited two-year contract. For the termination compensation, I was given one week's notice and told I would be given three month's salary for terminating the contract. My contract states: "The company may terminate your employment at any time by giving three months' prior written notice, or payment in lieu of notice." I've discussed with HR that they also need to provide payment in lieu of notice for 2.75 months, so for a total of three months’ notice. They have replied that the company is only required to provide three months compensation. Are they correct?

For my final settlement and accounting of accrued leave, does unused leave from the previous year carry over to the next? I've read some things about Article 78 that would imply this is the case, but would like to be certain before asking. I'm sure the company will tell me their policy does not allow carryover of leave, but if the Labour Law says it does, I would imagine that would be enforceable. Can you clarify? JV, Dubai

This is a private school, so UAE Labour Law applies. Where an employee on a fixed term contract is made redundant, Article 115 of UAE Labour Law is relevant and this states, “should the employment contract be of a determined term… he shall be bound to compensate the worker for the damage incurred thereto, provided that the compensation amount does not exceed in any case the total wage due for the period of three months or for the remaining period of the contract, whichever is shorter, unless otherwise stipulated in the contract.” Due to the provisions in the law, it is not common for fixed-term contracts to include a notice period. If it does, this notice must be given in addition to the early termination compensation. The wording in JV’s contract refers to notice or payment, so no additional notice period has to be given, provided compensation for the three months is paid. Therefore, the employer is correct.

In respect of annual leave that has accrued but has not been taken, this depends partly on company policy. However, the official UAE Government website states, per Article 78 of UAE Labour Law: “If the worker is requested to work during his total annual leave or a part of it and the leave is not carried forward to the next year, the employer must pay him his regular salary, in addition to a leave allowance, which is equal to his basic wage only. In all cases, annual leaves may not be forwarded for more than once within two consecutive years.” Therefore, if leave is not carried over then it should be paid so the individual does not lose out. However, a company does not have to allow for leave to be carried forward although their guidelines should be clearly communicated to all employees.

Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with over 25 years’ experience. Contact her at keren@holbornassets.com. Follow her on Twitter at @FinancialUAE

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

Updated: March 4, 2019 11:18 AM


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