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Wednesday, 22 June 2005 |
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It is amazing the feedback we get through this website when readers email us with the concerns and questions they have regarding property. If we consider the UK property situation only, most UK domiciled readers will recognise that they are liable to 40% tax on their worldwide estate (savings, property, deposits etc) in the event of their demise irrespective of how long they have lived overseas.
That said, if an Emirati buys a house in London and meets a similar fate, would he/she have to pay the same level of tax on that property? If you do not know the answer or know what domicile means, then you had better
Emirati buys in London and dies he/she is liable to 40% tax on that property after his/her allowance. An Anybody buys in the UK and you are liable. Irrespective of nationality or religion anyone who has invested in property in the UK is liable for this tax. It amazes us the number of property investors who do not take into consideration this factor and furthermore fail to take steps to avoid this potential liability. With proper planning it can be overcome. Likewise, it astounds us why property investors here think that because they are not from the UAE that they do not need to follow the local (Sharia) law in the event of their demise. This topic has been covered frequently enough in the Press and you should make sure your Dubai Property purchases are Sharia friendly if required.
Another myth shatterer is for those investors who buy Spanish property thinking they are getting around the UK taxman. In reality, a UK domiciled Spanish property buyer who then passes on could actually be hit for Inheritance (Death) Tax twice!
You must ensure you know the difference between Domicile and Residence. Domicile is generally considered the place of your birth or that of your fathers. It is very difficult to lose your Domicile status and is not done so on the premiss that you may have been living Dubai for over 20 years. Your Domicile governs your Death Tax status. You could be Deemed Domicile if you have been living in the UK for over 17 years – another wake up call for many international business men. If you are Non-Resident of the UK then you negate the need to pay income tax (unless you are generating income in the UK e.g. Rent!) and perhaps the biggest bonus is that Capital Gains tax is not levied either.
If you are not sure (even after this simplification of terms) then contact us today and we shall help you define clearly what your status is and if required, protect your assets from the unfriendly grip of home or foreign tax collectors. |
