Wealth Management for UK Expat Business Owners in the UAE

Why personal financial planning matters for UK business owners in the UAE

Business owners can sometimes end up having blurred lines between business and personal wealth. When business assets double as personal savings, the performance of the business can have a huge impact on your family’s financial security.

It gets even more complicated when you are based in the UAE. Unlike in the UK, where you have the NHS and state pension, there are no such safety nets in the UAE. This makes entrepreneurs solely responsible for their healthcare and retirement planning.

There is also the matter of tax planning. While you might be exempt from personal income tax if you have a business setup in Dubai, you are still subject to UK taxes on your worldwide income.

A strong personal financial plan helps you address these challenges and create a clear separation between business and personal finances, safeguarding your long-term goals for retirement, family, and succession, regardless of what the future holds for your company.

Step 1: Start by building a financial safety net

Building a solid financial safety net to protect your personal financial situation is a must for expat retirement planning in the UAE. any entrepreneur. Make sure you have these key areas covered:
Emergency Fund: Aim to set aside at least 3 - 6 months of living expenses. This is crucial given the variable nature of entrepreneurial income. You should also consider whether to hold this money in the UK or the UAE, weighing the pros and cons of each location.

Personal Insurance: The UAE does not have a publicly funded healthcare system like the NHS. Private health insurance is essential and often a requirement for your visa. Your wealth management plan should include comprehensive health coverage.

Key Person Insurance: This type of insurance policy is vital if your business relies heavily on you, a key employee, or a business partner. It provides funds to the company if a critical person becomes seriously ill or passes away to ensure business continuity. 

Step 2: Lay the foundation for your family’s financial future

A well-rounded wealth management plan goes beyond your business to protect your family’s financial future. These are some of the features that will be included:

Life Insurance: British expats with a UK business in the UAE can either opt for a UK-based or an international life insurance policy. Typically, UK policies may require you to maintain a UK address and bank account, while international policies are designed to be portable if you relocate again. 

Education Planning: Private school fees are a large financial commitment for UK families living in the UAE. A dedicated savings plan can ensure you have the funds needed for everything from local schooling to university fees back in the UK or elsewhere.

Your Will: Local inheritance laws in the UAE can differ from those in the UK. The DIFC Wills Service Centre, a government initiative in Dubai, provides a clear legal framework for non-Muslims. It allows you to register a will that ensures your assets are distributed according to your wishes, offering a vital layer of protection for your loved ones.

Step 3: Start managing your investments and savings

Once a safety net is in place, the next step in financial planning for expats is to grow your personal wealth. Besides returns from your business, UK expats living in the UAE can look to diversify their sources of income via investments in equity, bonds or property.

Optimising tax returns is also a key part of wealth management for expats. UK business owners in the UAE are not subject to personal income tax, but still have UK tax obligations on worldwide income. The HMRC uses the Statutory Residence Test (SRT) to determine your tax status based on factors like how many days you spend in the UK and your ties to the country, such as having a home or family there.

Step 4: Plan for your retirement and potential exit

The lack of a state pension in the UAE means that expat retirement planning is entirely your responsibility. You need to have a thorough understanding of your options when deciding whether to retire in the UAE or in the UK.

For many British expats, this involves reviewing existing UK pensions and exploring options like a Qualifying Recognised Overseas Pension Scheme (QROPS), which allows you to transfer your UK pension overseas.

For those planning to sell or close their business, you will also have to start planning for business succession or a future sale whilst still maintaining a clear separation between business and personal assets to protect your wealth.

Speak with a financial adviser who understands expat needs

Navigating your personal finances as a British expat with a UK business in the UAE requires specialist knowledge.

At St. James's Place, we understand the unique complexities of managing wealth across both the UK and the UAE. We provide financial advice for UK expats living in the UAE to help you optimise your personal wealth management, educating you on key areas like cross-border tax implications, pension planning, and investment structures.

Your time is valuable and best spent on running your business. By partnering with a knowledgeable financial adviser, you can confidently delegate the intricacies of your personal wealth to an expert. 

Ready to secure your personal financial future? Speak to a financial planner in the UAE today to create a plan that supports your ambitions, both in business and in life.
 

This article is a general communication that is provided for informational purposes only. It should not be relied upon as financial advice, and it does not constitute a recommendation, an offer or solicitation. No responsibility can be accepted for any loss arising from action taken or refrained from based on this publication. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted.

The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances. You are advised to seek independent tax advice from suitably qualified professionals before making any decision as to the tax implications of any investment.

Recommendation relating to a Will involves referral to a service that is separate and distinct from those offered by St. James’s Place.