# Dubai local/expat Contract?



## shafman01 (Jul 14, 2009)

Hiya chaps,

I would appreciate a lot if you guys can help me out here. I have been offered a position in my company's Dubai office for a period of 1.5-2 years. The company is suggesting that I go on a local contract but I am not sure on the pros/cons on being a local/expat contract? Any advice?

For the sake of this discussion, we can assume that the local contract would still cater for my accomodation etc.

From a taxation perspective, I belive that if I stay in Dubai for more than one full tax year, I can be counted as tax free on the earnings.

I think on a personal level I would prefer to come back to the UK after 2 years.

Any suggestions? I would really appreciate any help that I can get.

Warm Regards,
Shaf


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## Elphaba (Jan 24, 2008)

The terminology is pretty lose these days so you really need to establish the exact differences between what the company is offering you. Without details of the two it is hard to comment, but a local contract will preclude continual membership of an occupational pension scheme in the UK.


If you are out of the UK for a full tax year then the overseas income in that tax year is not subject to UK taxation, but it is not the same for partial years. For such a short period overseas (just two years), any year in which you are in the UK for more than 90 days will leave you subject to UK income tax on all your earnings. Ideally you need you time abroad to coincide with UK tax years.

Hope that helps a little, but feel free to ask anything. You will also find useful information in the 'need to know' sticky thread and by doing searches. 

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## shafman01 (Jul 14, 2009)

Hiya there,

Thanks for the prompt advice on the same. I really appreciate that.I have managed to get the details of the local contract and it is the below.


gross UK salary
accomodation for 1 bed room apt 
car rental economy class
medical insurance
company phone
adsl
shipping

also in the local contract there will be a clause that if I want to end my service in Dubai, I can revert back to UK to my corrent role.

Am I missing any points here?

If this does happen, then I would possible leave in Sept first week. Now you had mentioned that if I am in the country for beyond 90 days in one tax year, I will require to pay tax in the UK. My understanding was that the time period was 6 months actually...

With this in mind, which would be a better preference, local or expat?

Additionally, I am worried on the following fronts.

National Insurance: Currently my company pays like N.I for me. If this would be a local contract, then I suppose they would stop doing that. Long term, if I come back to UK after 2 years, how would that affect me. Same is the case for Pension.

Things like Income protection also might get affected.

I suppose in an expat contract, the company would still need to pay for these right.

I did try to do a search but couldnt really get anything specific to my case.


Regards,
Shaf


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## Elphaba (Jan 24, 2008)

Re the tax situation: If total number of UK days reaches 183 or more in any one tax year, individual is treated as UK resident. Or, if UK visits (while not amounting to 183 days in any one year) average 91 days or more for four consecutive tax years (but excluding any days spent in UK because of exceptional circumstances beyond individual’s control), a visitor is regarded as becoming both UK resident and ordinarily resident

If you are paid outside of the UK your employer does not make NI contributions, but you may continue to make voluntary payments.

If you are on a UK employment contract your employer may continue to make pension contributions on your behalf, but cannot do so if you are on a local contract. In that case you will accrue 'gratuity' in lieu. If you are a member of a personal/stakeholder pension arrangement you may continue making contributions, up to a maximum of £3,600 pa gross, for up to 5 years after leaving the UK.

An income protection policy would be invaliated by you being UK non-resident and earning overseas.

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## shafman01 (Jul 14, 2009)

Thanks a lot for your help. It does make it a bit more clearer for sure.

Cheers again.
Shaf


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