The lure of earning tax-free cash pulls thousands of expats to the glass and steel high-rise city of Dubai that rises out of the Arabian desert as a glinting beacon in the sunlight. Life is good in Dubai, but financial advice in Dubai is necessary.
Money may not solve all the world’s problems, buy love, or help with happiness, but money can make the days pass easier. But it’s no good piling up the cash if you don’t have a plan.
Your working life doesn’t last forever, and at some time, you will want to retire to spend your time pursuing personal goals or simply just relaxing. Find out more about financial planning tips while living in Dubai.
Dubai Financial Advice
Taking good financial advice in Dubai is one way to boost your choices to save, invest and eventually spend your money. It’s all about choice and money can help expand your options. That’s why you need to know how financial advice works in Dubai.
Where there’s money, you will also find scams and crooks ready to prey on unwary victims.
A good financial adviser will guide you through the dangers to a golden future.
How Dubai Financial Firms Are Regulated
So, as an expat, probably your first step is to find a good financial adviser, especially if you are new to Dubai and the way the local financial services sector works.
Avoid the shady know-it-all lurking in social clubs, bars and anywhere else expats congregate to relax.
What you need to know is how to find the right person for the job.
Besides checking if advice givers are licensed and authorised, make sure they are qualified to give you the guidance you are looking for.
For example, a mortgage broker cannot give sophisticated investment advice, while a bank adviser cannot talk about products offered by other financial organisations.
Trust and your financial adviser
The other important factor is that you can work long-term with your financial adviser.
The relationship may last for many years, like a trusted friendship or even a marriage. If you do not get along with your adviser, the relationship is likely to fracture sooner and put you back by having to search for someone else to work with.
Financial services in Dubai has three layers of regulation:
- The Dubai Financial Services Authority (DFSA), which has an independent adjudication service to handle complaints but no compensation scheme within the Dubai International Finance Centre
- The United Arab Emirates Insurance Authority, which covers Abu Dhabi and the other emirates as well as Dubai. The body has no disputes procedure or compensation scheme
- The Emirates Securities and Commodities Authority (SCA), which again covers all the emirates and Dubai, but has no independent disputes process or compensation scheme
The DFSA tends to focus on financial advisers and their firms, while the insurance regulator governs insurance brokers and providers and the SCA takes care of investments.
The government has announced the Insurance Authority and the Securities and Commodities Authorities will merge in September 2020, but details of any regulation changes have yet to be revealed.
Why expats need a financial plan
Planning your finances is like planning a journey.
You will have a destination in mind and some idea of how to get there, but you need a timetable or map to help with the finer details.
These days, a sat nav takes care of micromanaging the journey, helping you to avoid hold-ups and keeping you on the move to your destination.
But you have the final say. You don’t have to follow the plotted route and can stop or make diversions on the way.
Financial advice is the same. Your financial adviser is your sat nav. He or she will have the knowledge and experience to guide you to your financial goals, but you are in control of the brakes and steering, so you make the decisions.
Find out why do you need specialist expat financial advice?
What financial planning means
Making the right decisions about money is hard in an ever-changing world where so many factors beyond your control can make a big difference to if you are rich or poor.
Financial planning looks at what if scenarios and tries to rate the effect they will have on your savings and investments.
The best financial plans dig deep into your spending habits to free up money for savings, life insurance and what happens to your estate when you die.
Many expats look at financial planning as saving for retirement, but a good adviser can help with so much more.
As far as existing pensions go, you have four options, depending on your home country. These are:
- Roll your existing pension into another plan.
- Leave your pension where it is.
- Transfer savings into new employer plan.
- Transfer your fund into a QROPS (an overseas pension fund for UK pensions approved by HMRC which gives significant tax and investment benefits).
In addition, you should try to plan for an unexpected financial emergency. Savings plans can prepare you for any shortfalls in your wage and save as an emergency fund; with the general rule of thumb that six months’ worth of living expenses should be saved for an emergency.
Financial Planning’s Not Just For The Wealthy
Everyone can receive help from financial planning.
It’s a myth that discussing what you do with your money is just for the rich because they can afford to pay for the advice.
Finance affects many areas of your life, and a good financial adviser should save you more than the advice costs, whatever your means.
What will financial planning help you with?
First, managing money is a personal discipline, just like finding the time to exercise or deciding to go on a diet.
You need to actively check your spending, budget, and look to the future with savings and investments.
Don’t forget looking at one aspect of your finances could have unintended consequences somewhere else, which is why financial planning takes a comprehensive approach rather than concentrating on a single factor.
With each of life’s major milestones comes new financial responsibilities, and when you move abroad, the financial aspects can be even harder to manage.
But with careful planning with an independent financial advisor (IFA) regulated by the UAE, you can ensure long-term financial success and happiness in Dubai.
Managing Your Money
The wisdom of looking after your pennies means the pounds will look after themselves still holds true, even in Dubai dirhams.
Keeping an eye on your spending pays off because you can find wasted money and make small adjustments relatively quickly.
Some expats have a phone app, cash books or a spread sheet to do the job for them.
The problem for many expats is they may earn more and pay no tax in Dubai, but they also spend more on housing, a car and day-to-day living because they have more free cash.
The sensible expats live within their means and divert more to savings and investments.
The first step in effective money management is setting up a budget to track spending.
Buying A Property In Dubai
The number of mortgages registered with the Dubai Land Department has skyrocketed.
Expats are restricted to buying in free zone areas like Arabian Ranches, Downtown Dubai, Dubai Marina, and the Palm Jumeirah, among others – yet there are several other issues to consider.
At the outset, you need to make sure this investment is right for you.
Secondly, is buying your home part of your personal wealth management strategy? If not, how will it affect your other goals? An independent financial advisor (IFA) regulated in the UAE would be able to guide you through these considerations if necessary.
Read more in-depth about buying a property abroad.
Property buying process
Once you are ready to buy a property you should access the Land Department website for lists of registered developers and brokers. Because of the market’s relative infancy, it is vital to be cautious and only deal with these developers and/or agents.
Once you have found a house, you need to finance the purchase. Paying cash, if possible, is recommended, but there are plenty of other options, including arranging a mortgage on your property from a UK lender or remortgaging your home in the UK.
The best choice will depend on many factors, such as whether you own a property outright in the UK and your intended use for the house. Once again, an IFA regulated in Dubai, would be able to help by outlining all the available options.
Leasing a property
In early 2006, the Dubai Government passed a law allowing non-UAE residents to freehold ownership of property – but only in certain areas.
Owners can now derive income from their properties by renting; and it is generally understood that the owner has the same rights over their property as they do in other markets i.e. absolutely rights over their property.
This process does not incur survey fees in most cases, and Stamp Duty doesn’t exist in Dubai. This means the only significant cost is the land registry fee of 1.5%, payable on completion.
Yet before buying a property for this purpose, you should be aware that some developers can still sell leasehold titles – rather than freehold ones – which means the title is only valid for the period stipulated in the contract.
Marriage – Long-Term Happiness; Long-Term Responsibilities
Marriage in Islam is a contract between a male and female which is upheld by law and aims to safeguard the rights of both parties and any future children.
An Islamic marriage contract needs to be registered in a Sharia court within Dubai to become a legal document. For non-Muslims, the marriage obligations in your home country should be followed.
After the wedding, big financial decisions need making, including on your mortgage, paying bills, and budgeting for expenses – factors which also apply to married couples who decide to decide to move to Dubai.
A divorce is a great strain on emotions. By getting your finances in order and having a clear plan of your future, you can significantly ease this fraught process.
Firstly, you should get your immediate finances in order; and then compile a list of documents to obtain your divorce (such as monthly bank statements, tax returns, and details on jointly owned assets. You should avoid large purchases, and make sure you don’t sign any documents unless they have been looked over by your lawyer or attorney.
If you live abroad, you may be able to obtain a divorce from your current country of residence, which sometimes offer different options, depending on your religion.
Death of a spouse
The aftermath of your spouse’s death is a difficult time for you and your family. Whilst you are no doubt coping with many emotions, there are financial matters which much be addressed. The following steps outline what you need to do during this unfortunate event.
- Contact your attorney to evaluate the will.
- Obtain copies of the death certificate (many copies will be needed to close or move their accounts).
- Gather important documents (birth and marriage certificates, insurance policies etc).
- Try to find usernames and passwords for online accounts.
You will then need to review your financial position with a financial advisor regulated in the UAE, and potentially create a ‘financial support team’ – a group of experts such as a lawyer, your financial planner, and a trusted friend – may help with difficult decisions during this time.
Dealing with both your unexpected loss and financial matters at once can be overpowering, especially if the death was not expected.
Having your first child is one of the most life-changing events you can experience, and Dubai is an ideal place to raise children with its safe environment, top class schools and increasing amounts of family entertainment options.
Whilst nothing can prepare you for the big changes ahead, getting a handle on your financial future can help ease the transition into parenthood.
The most important thing to remember, is that the sooner you start saving for a new child, the better.
Planning for childcare, education expenses, tax implications and insurance in Dubai can be costly and time consuming and buying new baby goods will take up a substantial amount of money.
You may therefore want to talk to a financial advisor to help you plan for more complex questions about your new arrival, including:
- Have you looked at any benefits you may be due from your employer?
- Do you know how to update your wills and, if applicable, trusts?
- How can you resolve competing needs such as retirement with the costs of a new baby?
With a growing family, you may find your goals and priorities change without warning – something made especially different if you are not aware of UAE laws.
For example, if in the unfortunate event that either you or your partner die, children may be taken into care rather than left under the care of the surviving spouse – as per UAE law.
For these reasons it is essential you plan for your new child with an independent financial advisor (IFA) fully regulated in the UAE to build a flexible yet legally binding plan for your family.
Planning for an education is best started early. School fees, general expenses and time taken off work all add up, but creating a savings plan tailored to your needs can dramatically alter the ease with which you can achieve your goals, as the following example from Kansas State University, USA, shows.
If Person A puts away USD100 a month in a mutual fund for her son from birth to 18 years of age, but Person B waited 10 years from the birth of her son to start saving, before putting away USD225 a month for the next eight years. Both A and B would have saved USD21,600 – yet inflation creates a dramatic change.
Using today’s inflation rate, A’s portfolio would be worth almost USD47,000, while B’s only USD 29,963 – making a difference of USD 17,037.
Questions to consider:
- Will the study take place in your home country or abroad – and in a public school or private school?
- What are the costs right now, and how will they be by the time the education should begin?
- How long do you have to save?
Preparing A Will
An IFA can also help you prepare for the worst; by preparing an expat will which is legally recognised in the UAE.
Even if you have a will at home, you should have an IFA look over your document, as in many cases they would not be accepted by the UAE authorities.
If your will is not recognised, your estate after death would be handled according to Sharia law.
This means a surviving wife could only receive an eighth of her husband’s assets, or children may be taken into care – rather than automatically be left under the guardianship of the surviving spouse. And, if you have chosen to have joint bank accounts, the surviving spouse will find the accounts frozen until the authorities have concluded their inquiries.
As well as being a highly emotional time, going through a divorce, receiving inheritance, and preparing your own estate in case of death can create both financial and emotional stress.
But by taking the time to assess the options and plan how to go ahead with an independent financial advisor (IFA), you can plan your future wisely.
Expats sometimes have the added concern of holding property and other assets in more than one country, each with a separate way of handling a will.
It’s a good idea to have your financial adviser look over cross-border taxes and how they affect inheritance.
The solution is usually to have a will for each country where you have assets to ensure your wealth ends up with those whom you wish to inherit.
Receiving An Inheritance
An inheritance can arrive in many forms. Before you make any major financial decisions, it is a good idea to talk over the details of your assets with an attorney and a financial advisor.
Typically, you will need to find out:
- What type of assets you are going to receive?
- When the assets will be available?
- What taxes or other charges may apply to these assets?
Whilst inheritance can be used for short-term gains, many choose to invest or save the funds to plan or carry on any plans of the deceased. This means preserving what you receive is of paramount importance, which is where an IFA can help as well.
If you inherit a property and wanted to sell it, you need to be aware of the CGT for selling uk property.
Other Hard To Answer Financial Questions
Other issues that financial planning can help with are wide-ranging:
- Should you save with a bank or a savings plan?
- How much do you need to set aside for a pension and how should the money be invested?
- How much can you afford for a mortgage to buy your own home?
- How do cross-border taxes affect you as an expat?
- Should you save money offshore?
- How do you pay the bills if you are too ill to work?
- Do you need to put aside money for your children’s education?
- Does your family need private medical care?
- Are your loved ones protected financially when you die?
Many of these questions are difficult to answer unless you are a financial expert with access to gigabytes of data about interest rates, returns on investments or detailed knowledge of international tax rules.
Financial advisers have this data and more at their fingertips, plus the benefit of back-office experts to answer the legal and tax questions that will inevitably crop up from time to time.
The question is not can you afford financial advice as an expat, but can you afford not to take financial advice?
Savings and investments
Once you have secured the basics, you can look towards savings and investments.
The difference between them is savings are considered a short-term place to keep your money which is easily accessible if you need an urgent cash boost.
There’s no magic yardstick for how much you should have saved, but most financial advisers would suggest a fund of enough cash to cover the bills for three months should suffice.
Investments are longer-term savings that earn better rates because they are locked away for longer.
Investments would include savings plans designed to last five years or more, pensions and other investments.
To start saving, you may want to study your last bank statement to look at where your money is going. Checking how much you spend on essentials like rent/mortgage/food shopping and the rest and then calculating how much is spent on non-essential items is often the first step towards a better attitude towards saving.
You may then want to create a standing order. This will not only make sure you save on a regular basis; but also remove the temptation to spend in excess. You may also find that as you save more money, you are prompted to save more.
Household names such as Zurich Life offer a wealth of different options to watch your money grow. By partnering with an IFA from an international financial firm, you can take advantage of their international standing – which enables them to secure the best rates and offers from financial product providers.
An increasing number of expats are using the latest Fintech Apps to manage money and investments.
As there is no state pension in Dubai, if your employer does not offer a scheme you may need to start one yourself.
To start a pension scheme, you can use offshore pensions, but often it will be just as beneficial to use investment schemes. As there is no tax in Dubai, you will effectively be putting money into an investment fund with tax relief.
If you are a British expat, or someone from another country who has money in a UK pension but now lives elsewhere, an IFA can help you with the Qualifying Recognised Overseas Pension Scheme (QROPS).
These are special offshore pensions designed for expats supervised by HM Revenue & Customs in the UK.
For expats still UK tax resident, a self-invested personal pension (SIPP) is also worth considering.
Protecting Your family
If you have a partner and children, you no doubt want to look to their futures if you cannot work due to sickness, disability or even death.
Protection in the form of life insurance and income protection cover come into play to support your loved ones when you can’t.
Private medical insurance is a priority, especially if you are on assignment in a country with a limited health service.
A useful insurance add-on is critical illness cover that pays out when you are diagnosed with one of a list of specific conditions.
The Need To Start Saving Early
The following examples from Skandia International show the importance of starting as early as possible for retirement. Investment returns are assumed at 7% a year on a single life.
Example 1 – George starts saving at the age of 20 – putting away USD500 a month into a pension. This means he can expect a USD 1,120,000 fund when he retires at 60: Meaning a yearly pension of USD56,000.
Example 2 – Lucy starts saving at 30 – saving USD500 a month which could give her a total fund value of USD 570,000 when she retires at 60, making a pension of just USD 28,500 each year.
What Does A Financial Adviser Do?
A financial adviser guides you through the different life stages by devising and recommending strategies.
Over your working lifetime, you will inevitably have financial difficulties.
These include events like marriage, having children, changing jobs, accidents, or illness. Each presents a financial challenge and an adviser is there to cast an unemotional eye over what’s happening and to suggest what you can do for the best.
A good adviser will present options, discuss the pros and cons of each choice, but leave you to make the financial decisions.
To do this, your financial adviser must have the relevant qualification to give proper advice. The qualifications from a recognised independent organisation. The main bodies are:
- Chartered Insurance Institute (CII)
- Personal Finance Society (PFS)
- The London Institute of Banking and Finance (LIBF)
- Chartered Banker Institute (CIB) or Chartered Institute of Bankers in Scotland (CIOBS)
- CFA Society of the UK (CFA UK)
- Chartered Institute for Securities & Investment (CISI)
- Pensions Management Institute (PMI)
- Scottish Qualification Authority (SQA)
For offshore pensions, such as QROPS (Qualifying Recognised Overseas Pension Schemes) or QNUPS (Qualifying Non-UK Pension Scheme), and estate planning, the adviser should have more advanced qualifications and may belong to an organisation like STEP – The Society of Trust and Estate Practitioners or SOLLA – Society of Later Life Advisers.
Only deal with a professional
You should only deal with an adviser who belongs to a professional body – and don’t take their word for it because some advisers may not be who they purport to be.
It’s known for scammers to pose as qualified professionals, grab a fee and disappear.
Advisers belonging to a body are likely to have professional indemnity insurance that could pay compensation if you lose your money due to poor advice. The body will also have an independent adjudicator for dealing with complaints.
Check membership by searching either the regulator or body granting the qualification – don’t take the adviser’s word at face value.
You will need the adviser’s trading name and business address to carry out the check.
This issue tends to arise with solo advisers or small companies.
The problem will not arise of your deal with larger, well-known financial firms.
Not all advisers are the same!
Financial advisers can offer different levels of help to clients depending on their qualifications and who they work for.
Independent financial advisers – commonly called IFAs – should offer whole-of-the-market options because they are not restricted to discuss any specific provider’s products.
IFAs should put together a bespoke financial strategy to your needs based on a fact find, which is a detailed questionnaire about you current and future financial goals. The fact find should also address your attitude to risk so the IFA can determine the most proper savings and investments for you.
The factfind benchmarks your current financial status and gives the information the adviser needs to recommend products and services that match your needs.
Independent v tied
But some IFAs work for networks which are the engine rooms of their business. The network will give administrative support and sometimes access to a narrow range of products rather than the broader whole of the market approach of a true independent.
These advisers are sometimes called ‘multi-tied’.
The third type of adviser is ‘tied’. Tied advisers can typically only recommend products provided by their employers and are not allowed to discuss or refer you elsewhere.
The risk with multi-tied and tied advisers is you could miss out on better deals offered by other providers which could cost you a great deal of money over time.
This is an important point to bear in mind in Dubai, as advisers in the United Arab Emirates don’t have to have any formal qualification.
How much does financial advice cost?
That depends on you and the advice you are looking for.
Everything comes at a price. In some cases, the adviser will charge a fee, while most will bundle commission with the products and services they recommend, which often means you never know how much you are paying for the advice you receive.
In Dubai, most financial advice is commission-driven and often what you pay is rarely showed.
Commission is not all bad, though. As an expat, you would not work for free and you should not expect your financial adviser to do so either.
There’s no free lunch in Dubai financial services, although your first meeting with an adviser generally comes without any charge.
You should discuss your ongoing advice needs, which includes trying to negotiate a fee to keep costs down.
Don’t pay twice for the same advice – either pay a fee with the commission waived or shown, or accept you pay commission as part of the price of any recommended products or services.
Questions to ask your financial adviser
Feel free to discuss your financial adviser’s qualifications and experience.
You need to know if they have other customers like you and how you can continue your advice relationship if you move to another city or even to another country.
Search for reviews of them and the firms they work for but take comments with a pinch of salt.
Testimonials are bound to talk them up, otherwise there’s not much point in publishing them, while some people are likely to complain. Just think how often you are moved to write a review online, which is probably rarely, if at all, even if you have had a terrific or phenomenally bad experience.
It’s much better to carry out your own due diligence, which should cover their:
- Qualifications and experience working with expats in Dubai
- Independent or tied status for recommending products and services
- Status with the Dubai Financial Services Authority (DFSA)
- Fee and commission structure
- Arrangements for continuing advice should you move or leave Dubai
- Professional support for handling tax and estate planning between your home country and Dubai
Other boxes to tick should include:
- How quick an adviser responds to your calls or emails, because if they cannot offer good customer service when a new client gets in touch, they are unlikely to do so once you are on their books.
- An adviser who charges a fee rather than a commission-taker is likely to be cheaper as you are in control of how much you pay and the cash is not siphoned out of your premiums, reducing the value of your savings or investments.
- Most regulated firms and advisers will have offices in the Dubai Internal Finance Centre, a financial hub for the Middle east, Africa and much of Asia.
How to find the right financial adviser
Word-of-mouth is a good place to start if you have expat friends in Dubai who have already sourced financial advice.
You can also look at some tried and tested routes, such as an internet search, trade directories or the local press.
Some large advice companies have a global office network and can look after all your financial needs, regardless of where you are living or working.
Choosing the right professional who you can trust with your pension, family finances and savings is like recruiting a specialist to fill a financial role in a business – but few of us think that way.
Hiring such a workplace financial expert would involve a lengthy and detailed process of applications, interviews and reference checking before reaching a final decision.
So why not impose the same process on the person you are entrusting with your family finances?
Take your time recruiting the person who will play this important role, and don’t be rushed into deciding.
Get Financial Advice
We can put you in contact with a qualified specialist expat financial advisor based in your location. Click the button below to get the expert advice you need to make the best financial decisions.
Advice with benefits
Financial firms that can offer some added extras can save expats money with exclusive deals.
Many of the larger financial firms in Dubai have links with banks, money transfer specialists and providers offering preferential rates for services normally beyond what you would expect from an advice-only firm.
These are useful and cost-effective because your money management is under one roof and you are receiving help from economies of scale you could not hope to achieve as an individual.
What New Expats Should Do About Tax
The first step is confirming your tax residence.
All your tax issues will flow from determining where you are resident for tax.
Each country has a checklist for working out if you are tax resident, so it’s not a decision you can make for yourself but dictated by circumstances.
The two main factors are where you have your main home and how long you spend living there.
Many expats find that they may have lived outside their home country for many years, but rules decide they are still unexpectedly tax resident.
Don’t forget ‘expat’ is not a legal term.
Are you really an expat?
You can call yourself an expat if you have a main home in one country and move to Dubai on a contract for a year or two, but that does not make you tax resident in the United Arab Emirates.
If you keep tax residence in another country, you will pay tax on your earnings there.
Some countries, like the USA and South Africa from 2020, expect expats to pay tax on their worldwide income regardless of where they live.
That’s why not understanding expat tax is costly for anyone moving to a new country who ignores how the rules affect their finances.
Expats need to plan for the financial affairs in the country that they are leaving as well as in their new home.
Six tax tips for expats
Although expats should take personal advice in both countries, there are some general rules of thumb they should bear in mind.
- It’s no use waiting for the tax authorities to catch up with you – expats should start tax planning at home and abroad months before the departure date
- Tax normally follows residence, so don’t forget to make sure where you are likely to be tax resident, so you follow the correct rules
- Expats shouldn’t try to navigate tax rules on their own but should seek professional advice
- Expats want to move their money freely, but some countries impose rules and exit taxes about taking foreign currency beyond the borders
- Zero tax and a cheap cost of living may make moving to Dubai attractive, but many expat destinations will want to see money in the bank and expensive private healthcare are covered on entry to avoid any drain on social service budgets
- Avoid any surprises in your pay packet by asking employers how tax affects take-home pay. Tax equalisation deals should mean expats should pay no more tax than they would at home.
Not all moves abroad run smoothly. Many expats cut short foreign assignments because of family issues (54%), poor health (42%) or culture shock (28%), according to data from the Legatum Institute Foundation. These reasons can wreck tax and financial planning, so expats should ensure they know how tax will hit their finances if they return home early.
The importance of tax residence
Tax residence is important, because all your financial advice and recommendations are based on where and how much tax you pay.
If you get tax residence wrong, your finances can quickly unravel as you could face unexpected tax bills that will devastate your savings and investments.
FATCA and CRS
The UAE and Dubai have signed up to CRS and FATCA, which means any bank or investment accounts expats hold in the UAE are reported to their home tax authority and compared to their tax filings.
FATCA only applies to US expats, but CRS is a network of more than 100 tax authorities swapping financial information.
Balancing Risk And Opportunity
Risk and opportunity are two of the buzz words in financial services.
Your financial future is based on the risks you are prepared to take with your money and the opportunities to make money that present themselves over time.
- Risk is any factor that can cost you money – this can range from wildcat decisions made by politicians, to natural disasters or personal issues, such as divorce.
- Opportunities are factors that can make you money – from the cryptocurrency bubble to staking cash against equities, currencies, or commodities.
Many investors make money by playing the margins in volatile markets, like the yo-yoing price of cryptocurrency Bitcoin.
Counting your profits and losses
How much profit or loss you make is determined by your attitude to risk when an opportunity arises.
The big profits go to those ready to take the most risks, but often these same people stack up the largest losses.
Your financial adviser should balance these two extremes for you by carefully questioning you about how much risk you are ready to bear.
Risk also affects other areas of your finances besides investment.
Think about banking. If you are on assignment in a politically or economically unstable country that threatens to nationalise banking and your savings, perhaps you should keep your money elsewhere.
Expats are often told to follow the ABC rule – if you come from A, live in B, then bank and invest in C.
Benchmarking your current finances
You can’t plan where to go with your finances unless you already know where you are.
That’s called benchmarking and is plotted by your financial adviser with a fact find.
The factfind analyses your financial status by going through your income, spending, savings, and investments step-by-step.
Your factfind will also include other factors, such as private health and life cover.
The idea is to find any areas where your finances fall short and improvements might be made and to deliver a net worth statement. That’s a balance sheet of what you own less any liabilities, such as a mortgage or loans that you owe.
The final figure is your net worth.
Net worth and your investments
Your net worth can also determine the products and services your financial adviser can offer.
Expats with a salary of more than £100,000 (US$130,000) a year are considered high net worth individuals (HNWI) by financial companies.
Financial advisers will often have a special range of products for these sophisticated investors, who are treated as if they have more financial knowledge than lower earners.
The more disposable cash an expat has, the higher up the wealth scale they rise – to the peak as an Ultra-High Net Worth Individual (UHNWI), who has £23 million ($30 million) of liquid financial assets.
Moving Back To The UK
Globalisation has made working abroad an option for many skilled workers, and the benefits can be very enticing.
However, many find returning to their home country after time in a foreign country more disorientating then their first move.
Leaving your job in Dubai
Whether you quit your job or are being laid off, the minimal notice period in Dubai is generally 30 days. Your company will generally handle the paperwork during this time – with your visa cancellation being the most important aspect of this stage.
You should give up to two weeks for this process to be complete. Once your visa is cancelled, you have an exit deadline, and have a maximum of 30 days to leave the UAE. Your final payment/severance package will only be paid when your visa is successfully cancelled.
After this, ensuring your financial affairs are in order is potentially the most vital step. When your work visa is cancelled, your company is likely to notify your banks. If you have any outstanding debts, your accounts will be frozen until the amount is cleared, or until your bank receives documentation you are able to make the payments. Once this is done, you can then cancel your accounts and credit cards.
Finance aside, housing can be a tricky situation, as you may be responsible to pay the rest of your due rent or need to tie up any bills such as for utilities and media. You then need to transport any cargo or pets home.
If you have children at school, you should obtain a report card or certificate and an official transfer letter to make enrolling in a new school easier.
Then finally, you should consider the tax liability in your home country. If you move back to your home in the middle of the tax year, you may be liable to pay taxes on what you have earned in the UAE.
Whilst some of these issues can be handled without expert help, enlisting an experienced independent financial advisor (IFA) during this time can make the whole process much easier. For example, an adviser who specialises in emigration can ensure you don’t pay taxes you don’t need to on your return home.
Moving back home
When you move back home, you will have to put some of the things you did before you left in reverse. This includes:
- Contacting your country’s embassy to learn if you need to start any re-entry processes.
- Sending your Dubai/UAE medical records back to the UK doctor.
- Telling HMRC and the Department for Work and Pensions that you are returning to the UK.
- Transferring your money back to your home country.
- Preparing your new home.
- Enrolling your children at a new school.
Less vital, but still important, you may wish to ask for benefits from your company to receive the recognition and contract you require.
You Really Do Need A Financial Plan
To sum up, if you are an expat in Dubai, there’s no reason why you should not have plenty of money to save if you are sensible about how you spend your salary.
But it’s no good having money to save and invest if you don’t have a plan as well.
That’s where a professional, reputable financial adviser can step in and help.
Follow our guidance and check out your adviser’s credentials before parting with any cash and you are taking the first step on the road to protecting your family and a comfortable retirement that might come sooner than you think.
Financial Advice In Dubai FAQ
As an expat settling in Dubai, financial opportunities will come at you thick and fast – but don’t underestimate the challenge of saving and investing in a foreign currency and under a different set of rules that come with Islamic law.
An independent voice helping with the task is regarded as a great help by many.
But finding the right financial advice is an important task that should take priority.
To help, here’s a list of questions expats frequently ask about financial advice in Dubai.
Some of the UAE general regulations apply to Dubai, but Dubai also has a set of regulators and financial rules that apply just to the Emirate. Your financial adviser should take you through these if they apply to you
Yes, as an expat on assignment, talking to an IFA about your finances could be useful. However, you will need to know if you are UK tax resident or non-resident before going ahead. You can find this out by following the steps in the section above What New Expats Should Do About Tax
Show some caution – technically a Dubai resident can open a QROPS but will have to pay the 25% overseas transfer charge as the UAE has no QROPS provider. Another choice might be an international SIPP.
Dubai is a signatory with the UAE to the information swapping agreement with the IRS under The Foreign Account Tax Compliance Act (FATCA), so providing your holdings trigger the thresholds, the Dubai authorities will pass details of your local finances to the IRS. Similarly, expats from many other countries can expect the same treatment under the Common Reporting Standard.
Although the bank probably has some excellent financial products, it’s in your best interest to have the review conducted by an independent financial adviser. You bank adviser is likely to be tied and unable to give anything but a limited view of what’s available on the market for you and your family.
Other Country Financial Advice Information
Looking for financial advice information for other countries? Read our other articles here:
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