How will my UK tax be affected if I work in the UAE?

I am currently working in the UK and I am a resident there. My employer advised me to work in the UAE for a few years under a UAE contract – my organisation has an office there. I own a house in the UK and may choose to rent it out if I move to the UAE. What should I be aware of while working in the UAE to ensure I am not considered a UK resident for personal tax purposes?

Stephanie Mooney, Senior Associate in the Private Clients team at law firm Kingsley Napley, you say UK exposure Income tax and capital gains tax (CGT) depend on your residency status. Once you become a non-UK resident, you will only pay UK income tax on any UK-sourced income and CGT on gains generated from UK residential property. Your earnings in the UAE will not be subject to UK income tax.

Your residency status is determined by the Legal Residency Test (SRT). It’s complicated, but all in all, you should pay attention to the number of days you spend in the UK and the number of contacts you maintain with the UK. The higher the number of contacts, the fewer days you will be in the UK before you are considered a UK resident.

If you have a family and accommodation relationship and you stay in the UK for more than 90 days, you will become a UK resident for a tax year. Your UK home, even if rented out, may still be considered a tie, depending on how much of the sky is set up and available to you during the year.

If you do not wish to break away from your UK property ties, it would be wise to consider keeping your UK stay to a minimum (for example, meeting friends and family outside the UK if possible).

If you move to the UAE and start working there full-time midway through the UK tax year, you may be able to claim a split-year treatment on your UK tax return, rather than being considered a resident for the entire tax year. You should seek advice from a tax professional on this.

Your Inheritance Tax (IHT) treatment is up to you domicile, is also something worth considering. If you are currently resident in the UK, living in the UAE for several years is unlikely to change your general residency status. As an individual domiciled in the UK, your global assets will be within the scope of the UK IHT at the time of your death.

You should also beware of tax traps, including the “previously resident” rule. Assuming you were born in the UK with UK origin, you will be considered a UK tax resident the moment you gain UK residency again (there is a small grace period for IHT).

There are also some “temporary non-resident” rules to be aware of. If you return to the UK within five years and are subject to these rules, any gains you realise while you are in the UAE will be considered gains realised while you were a UK resident.

How Much Tax Will We Pay for Farmland ‘Over’ Payments?

My wife and I are about to dispose of a small piece of farmland and would like to know what the CGT rates and allowances are. We jointly own the land, there are no buildings on the land, it has always been pasture. Sales will be “excessive” [an arrangement to allow the seller potentially to benefit from a subsequent rise in land value] If the new owner obtains planning permission. What tax is paid on excess charges that may be paid in future years?

David Chismon, partner at accounting firm Saffery Champness, Indicates that the starting point will be to calculate the capital gains tax (CGT) that may arise when the property is sold land. Essentially, this will be the difference between the sale price and the purchase price.

The acquisition price, known as the CGT base cost, will be the price you paid when you purchased the land, or possibly the probate value if you originally inherited the land. You can deduct costs involved in the sale process, such as attorney fees and real estate agency fees, from the sale price, so keep these records.

CGT base costs can add to any costs associated with acquisition costs. Again, this may include legal fees and similar fees, but also stamp duty land tax if paid at the time of purchase.

Since you jointly own the land, the capital gains will be split equally. If the capital gain is higher than your annual CGT allowance and is not used for other capital gains for the year (CGT allowance of £12,300 for 2022-23), then some tax will be payable unless the capital loss can be used to reduce further gains .

Assuming your other income uses up your base rate income tax range, the tax rate will be 20%. If any capital gain falls within your basic rate income tax then it is only taxed at 10%.

In some cases, a business asset disposal relief may be available if the land has been used for a trading business and the business is ceasing, which makes qualifying capital gains taxed at 10% with a lifetime limit of £1m. Relief is somewhat complicated rules and therefore require accounting advice.

In terms of overage, it may be subject to CGT and may also be subject to income tax, but this will depend on the terms of the overage agreement. If you are likely to benefit from the profits generated by any development project, then some (if not all) overage may be subject to 45% income tax (even if you are not an additional taxpayer).

However, if the excess is limited to an increase in the underlying value due to planning permission, then this should be held for CGT. It is important to get expert advice to determine the position. Depending on the likelihood of getting planning permission, there may be intrinsic value today and must be valued when the land is sold. When the final overpayment occurs, the tax now paid will be set based on the actual overpayment receipt.

Finally, since the land does not include any residential property or residence, the tax date will be January 31st following the end of the tax year for the unconditional contract exchange. Therefore, if contracts are exchanged on or before April 5, 2023, the expiry date of the CGT is January 31, 2024. If the contract date is April 6, 2023, the expiry date of the CGT is January 31, 2025.

The opinions in this column are for general information only and should not be used as a substitute for professional advice. The Financial Times Ltd. and the authors are not responsible for any direct or indirect results, including any losses, arising from reliance on the responses, and are fully excluded from liability.