1. The 5-year expat master plan for UAE residents
Aside from the lure of sunnier climes many individuals are drawn to live and work in other countries for
increased pay, better benefits, even lower tax, and in some cases no tax at all.
Becoming an expatriate can carry with it many financial benefits and the notion that one could come back
to their home country not only more tanned, but somewhat richer too.
And so…. the plan is hatched! The usual time scale considered is five years and many expats will spend
time conjuring up their five year plan master plan – one of accumulating as much wealth as possible
before moving back to their country of domicile or moving to another location.
But how many expats actually stick to this five year plan? Is it really possible to make a significant
injection to your overall net worth in this period of time and what is the best way of going about it?
The sad truth is that thousands of expats have dreams of making big pots of cash,only to end up totally
broke with hardly any savings, after years spent living the high life.
So how do you make sure you don’t return broke and how do you make your plan as effective as
possible?
Starting to save
Well let’s start with the basics. A good rule of thumb is to try and save at least 10 – 20 per cent of your
income. But you must budget for this. Don’t just do it because you have money left over at the end of
each month. Consider it a monthly out-going as standard - just like you would pay for your mortgage or
your car insurance.
Think twice before you upgrade your car or your villa in the sun and make sure that you are regularly
putting money away. It is advisable to always keep at least 3 month of salary readily available in a cash
account. Anything over and above this should be considered medium to long-term savings.
Ask yourself: What am I saving for? Then set yourself an achievable target over this five year period.
Where to save?
But what to do with your money?
Well, if you remember investing in the 1980s, you probably remember when deposit accounts paid a
handsome rate of return. Nowadays we are all too familiar with rock bottom interest rates. With inflation
in most countries being higher than bank interest rates your money is standing still at best. So even if you
are earning more or not paying tax you are not safe from inflation.
So sticking your money in a standard deposit account is going to get you nowhere. But there are still
powerful planning tools available, which can be used creatively to help you make your newfound wealth

2. grow. In the offshore market space regular savings vehicles and offshore portfolio wrappers/bonds via
large insurance companies are commonly used.
Regularsavings
A regular savings vehicle provides a disciplined approach to wealth creation while also providing
insurance protection.
It provides a secure platform to save regular amounts, usually monthly in a disciplined manner with the
opportunity to earn greater interest than you would get from a standard savings account.
Each time you make a contribution to your pot, your money is invested in a range of chosen funds that
will be selected based on your situation, objectives and attitude to risk. Many of the advantages derive
from the fact that the investment is structured as a life insurance product.
There is a small amount of life insurance built into the product - usually 101 per cent of the total value of
the portfolio, which will be paid out to the chosen beneficiary.
Offshore bonds/lump sum investment
An offshore bond is essentially a secure place to park your money whilst enjoying protection and growth
from it. A cash lump sum is placed into the bond, and this is then placed in an agreed range of funds.
Commonly used jurisdictions are places like the Isle of Mann, Guernsey and Jersey.
Probably, the main advantage of an offshore bond/wrapper is the fact that they are only ever taxed when a
taxable event takes place, such as redemption, not on an annual basis. The only tax to which funds may be
liable is that which is deducted at source, e.g. from a dividend. This is known as withholding tax.
Of course, the specific benefits of investing in an offshore bond will always depend on an individual’s
circumstances but there are many advantageous elements that may be used. Two of which we will
consider below. Time for the science!
A key tax benefit for a UK expat who at some stage may return to the UK is Time Apportionment Relief.
This is where a chargeable gain from the bond is reduced for tax purposes if the bondholder was not UK
resident throughout the policy period.
Assignment is another benefit. It is also possible to assign an offshore bond to another person, so that the
assignor will not be subject to any UK income or capital gains tax charge. Thereafter,all future UK
income tax is charged at the assignee’s tax rate. Therefore,the overall UK tax payable on the offshore
bond can be reduced if the policy is assigned as a gift to a non-taxpayer, for example a child or a non-
working spouse.

3. Currencyhedging
Although it can sometimes feel like monopoly money, earning a different currency to that earned in your
home country, this can be used in your favour. In Dubai, for example, where the majority of people are
paid in dirhams (fixed against the US dollar), a practical approach is to save in USD. You can then always
switch to your base currency in the future when the currency exchange rate is to your advantage.
Stick with it
Five years is a reasonable amount of time to save. You can see the horizon ahead of you so stick with it.
Set yourself that goal and don’t veer away from it. Whether it is to accumulate a lump of cash by
disciplined regular saving or to give up that swanky new villa and put aside a lump sum for greater
growth - prioritize and think about what it is you are saving for, so that you have an end goal in mind.
Don’t waste the opportunity you have and take advantage of your expat status.
Tax and returning home
Tax is never far from the minds of most expats,making it an essential part of money management. It is
vital that expats understand the taxes they are likely to be subjected to before making any decisions -
getting it wrong could prove to be very costly. Be careful as if you decide to return to your home country
and bring back the money held offshore you may have an income tax liability on the gain.
Consider Inheritance Tax implications (IHT) too. Many British expatriates may live outside the UK
income tax net but, unless they change their domicile, their estate is still liable to IHT. It is always best to
seek advice from a tax lawyer or financial adviser that specializes in this area.
So, it might be time to give up a few of those expat luxuries and endeavor to make that five year master
plan a reality.