Risk of keeping money and assets in the UK Vs Dubai

  • September 10, 2023
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Although UK banks are considered safe. Increasing inflation and rising cost of living is eating away at savings constantly. There are 2 main options when storing money in banks. Current accounts and Saving accounts.

With current accounts, no interest is paid and with the prevailing levels of inflation at 3.5% in the UK, your money is slowly being eroded away by this undeclared tax. On the other hand depositing your money in savings account will have given you on average a savings rate of 2.6% in 2024. This is set to decrease with the recent reduction in the base rate by the Bank of England in February 2025. Hence your saving rates are not keeping up with inflation and your money only continues to lose its value. This is compounded by the fact that the UK government will only allow for the basic rate taxpayer to earn up to £1,000 in interest tax-free, and just £500 if you're a higher rate tax payer. If you’re a basic rate tax payer and your income is being supplemented by interest earned on savings then this could inadvertently push you into the higher rate tax band!

Thinking of storing money in assets, namely bricks and mortar? Think again, the government is cracking down on landlords with the mortgage interest rate relief being withdrawn for landlords who hold property in their sole name. Meaning landlords are being taxed on the full rental income irrespective of the fact some more landlords will have a mortgage. The new Labour government is introducing new rental laws and regulations for landlords to comply with as well as doing away with Section 21. Local governments are also getting in on the act of using landlords as a cash cow by introducing licensing schemes, ostensibly for the purposes of ensuring that landlords are providing housing that is fit for purpose. This will only lead to red tape and extra costs for landlords. Hence more and more landlords are exiting the UK housing market by selling up.

The government comes back into the equation at this point. Landlords are hit with capital gains tax, when they sell their property. Lastly should a home owner die or want to transfer or gift a property to their children then again they will have to contend with punitive taxes of 40% for a rental property. The government will always want their cut.

So landlords are selling up and considering where to reinvest their money. Where else can they invest in a secure environment with better returns and little to no taxes?

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