Quote:
Originally Posted by richie83
im not too sure, but from what i understand you would have to pay 18% even if you dont bring the money back, because if you are a UK citizen you pay capital gains tax on your WORLDWIDE gains. best thing is to ring your tax office, thats what i did. am based in london.
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Hi,
It works like this:
If you are UK resident and sell an investment property in Dubai (or anywhere else for that matter) - firstly, you must pay tax in the local country - however, in the case of Dubai / UAE, there is zero CGT so no problem. Secondly, you must pay tax in the UK at 18% (you have the allowance of course). This is irrespective of where the proceeds actually go - whether they stay in a Dubai account or are repatriated to the UK.
There is a way around this - get non-resident status (a whole new topic...) but this in essence requires you to spend most of your time outside the UK (I won't bore you with the details). If you gain non-resident status and sell, you will not pay CGT UNLESS you move back to the UK and take up UK residency within 5 full tax years. In such a case, the gain is viewed as having taken place in the year of return and you will be liable for CGT.
Example - you buy a property in May 2008 & sell April 2009 - if you were non-resident pre-sale (which is the important bit) you will pay tax if you go back to the UK before 5 full tax years have passed. So, if you conveniently became non-resident on 4th April 2009 (just before new tax year), you could move back on 6th April 2014 because 5 full tax years will have passed.
In answer to the other question about UAE rental income - this is liable at your income rate in the year it is earned if you are UK resident.
Hope that helps.