UAE structure for trading, UK citizen and capital gains tax.

[UAETrader454]

Hello, Im looking for some advice on my structure, would it stand up legally by the UK tax authorities.

The structure is, UAE residency with an investor visa, LLC company formation and business bank account, I would then an open interactive brokers account using the company name, funds are paid into the business bank account and transferred to IB, then investment and trading profits will be paid back into the UAE LLC company account and paid to myself as either salary or dividends.

I would be out of the UK for 9 out of 12 months to stay under the 90 day limit so I qualify for the automatic overseas non residence test, If i do not meet this then as I have only 2 ties I should also be classed as non resident.

My main concern is if I return to the UK within 5 years is that they claim they can tax you on any capital gains made during that 5 year period, Im assuming this is only applicable as an individual and they cant tax me on my UAE companies capital gains as this is a separate legal entity and I have received a salary which is not taxable.

So am I correct in thinking this would protect me from capital gains tax in the UK? and most importantly It will be completely legal?

Thank you

 

[khinkali]

If I remember your holding timescales correctly you seem to be trading not HODLing so you might be making income rather than capital gains. Still, the five year rile can apply to any assets you leave the UK with.

The rule is to stop you going to the UAE and cashing out your gains that were partially made while you were in the UK. It is quite harsh compared to a normal exit tax because it can tax gains that were partly (even fully) made after leaving, if you acquired the asset before leaving.

You want to cash out your assets or otherwise have some taxable event when you leave. This way you're making new investments while non-resident so they're not caught by the five year rule. UK property (e.g. a house) has different rules.

Note that these are full UK tax years (April 6 to April 5). HMRC can give split year treatment when leaving but you should get professional advice to make sure it's accepted. Things could get complicated if you move to Dubai and start trading while UK tax resident.

 

[CaptK]

Couple of questions.

Do you hold anything at the moment?
Where were the funds derived from?

In simple terms what you have before you leave is liable, so its best to clear that up and pay what you owe so not to confuse with future earnings.
Make the move and then start fresh and you could also be able to take advantage of non dom, subject to fitting criteria. That will allow you 180 days in the UK.