CGT considerations for UK and South African expats leaving the Gulf
Expats who build up substantial savings and assets while working in the Gulf States must restructure their financial affairs when they leave to prevent facing hefty tax bills when returning home or relocating elsewhere. Here’s how to protect your wealth.
Niel Pretorius ● Mar 26, 2025
Tax implications of leaving the Gulf States
Many South African and British expats living and working in the Gulf States have taken advantage of tax-free salaries and generous benefits to build their wealth. However, once you decide to leave, your tax obligations will change significantly. Understanding the implications before you depart can help you avoid unexpected costs.
Whether you have invested in property, or commodities or bought stocks and shares, it is crucial to be aware of how Capital Gains Tax (CGT) applies to your assets when you leave.
For UK expats moving home
How to protect your wealth
- Encash your shares: If, for example, you’ve bought shares worth £500,000 in Dubai and they have grown to £1 million, you could be liable for CGT when you return to the UK and only sell them at a later point. Disposing of these assets to reset your capital base would eliminate this from happening.
- Set up an international investment bond: Offshore investment bonds offer a tax-efficient investment solution for expats returning to the UK, providing flexibility and financial advantages during repatriation. They allow you to grow your investments tax-efficiently, but offshore and offer diversification within your investments. These bonds allow for tax-deferred growth, reducing immediate tax liabilities and offering key benefits like gross roll-up, time apportionment relief and top slicing relief to manage gains efficiently. They are well suited for longer term income requirements.
- Sell property before relocating: It will make sense to sell any real estate you may have bought before you leave the UAE to avoid CGT. If you sell the property after moving back to the UK, you may be liable for CGT on the profit.
How will your pension be taxed?
UK expats in the Gulf States should continue to make national insurance contributions to build up their state pension.
If you have contributed to a foreign pension whilst abroad, you will need to understand how this will be treated once you are UK resident again.
For South African expats moving home
How to protect your wealth
- Set up a trust: Placing your assets in an offshore trust creates flexibility and can shield you from exposure to estate duty, and provide tax efficient access to your funds.
- Diversifying your portfolio: Buying property is one option and is fairly straightforward but ensure that you do your due diligence before a large purchase.
- Currency considerations: With the volatility of the South African Rand, keeping some assets in more stable foreign currencies can act as a hedge.
Understand new pension tax proposals in South Africa
One of the most contentious tax proposals in South African Finance Minister Enoch Godongwana’s latest budget (presented in Parliament on 12 March 2025) involves changes to how cross-border retirement funds are taxed.
Currently, South African tax residents are exempt from tax on foreign retirement lump sums, pensions and annuities, if these benefits stem from work done outside the country. However, the proposed amendment would remove this exemption, subjecting expats and returning South Africans to full taxation on their foreign-earned retirement income.
- Why is this happening? The South African Treasury argues that the current system leads to “double non-taxation” in cases where South Africa has taxing rights under a treaty.
- How does this compare to other countries? Various countries offer reduced, or no tax on foreign pensions when you move there. The reasoning behind this is to attract wealthy foreigners to their shores where they would spend their money in their economies.
Take action before you leave
Moving from the Gulf States to another country, whether back to South Africa, the UK, or elsewhere, can be exciting but a bit overwhelming. There’s a lot to think about and it's important to do your financial planning before you leave to avoid unexpected and costly mistakes.
Our expert advisers will be in Dubai, Abu Dhabi, Riyadh and Doha from 7 to 13 May and would love to meet with you for an in-person consultation to give you valuable, complimentary advice on how to ensure a smooth financial transition when you leave the region.
Spots are free but limited, so make sure you don’t miss out.
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