Dubai and tax

[Adam.]

Hopefully more appropriate here than the employment section.

Considering a move to work in Dubai, and just want to double check my understanding with tax, as it seems my initial understanding was incorrect, i.e. that a return within 5 years would mean retrospective UK income tax on all Dubai income.

Lived and worked in UK all my life.
I would be a Dubai tax resident, with no home or dependents in the UK (daughter 18 and going to uni in Sept and lives with mum).
Would obviously stick to days allowed back in UK
Would be working for a Dubai company.
Possibly a few work trips to UK to meet service providers / attend conferences but incidental to main job.

It seems:
1. If I return in say 3 years to be UK tax resident I will not be taxed on my Dubai salary.
2. I won't be taxed when moving Dubai employment income back to UK
3. I would have to pay UK tax on any UK CGT, UK rent, UK pensions etc
4. I would have to pay UK tax on interest earned on capital earned abroad

3 and 4 are largely irrelevant for me.
1 is really want I need to confirm
2 curious whether you can move it back whilst still out there, or only when you return

[Matt p]

Similar set up to myself in Grand Cayman.

You re unable to save into any form of ISA. Sending money home via wise or similar is helpful. However if you re being paid in USD and sending back, try to find the cheapest ForEx you can.

Stand to be corrected here, but if you return part way through the U.K tax year you’re liable for the portion of your salary earned abroad, at what every rate bracket the salary falls into.

Congrats on wanting to make the jump from the U.K, it has its challenges but can be a great life experience. One thing I d say is that keep both your eyes wide open and feet on the ground. It s very easy to get swept up in the expat lifestyle.

Edited by Matt p on Friday 30th May 00:22

[mikef]

I did this in the Caribbean . No local or UK income tax (at that time)

However, a colleague did have to relocate back to the UK in a family emergency and had to pay UK income tax on his entire offshore earnings, so be prudent until you are sure you have avoided UK tax

https://www.gov.uk/tax-foreign-income/residence

[Adam.]

Matt p said:

Stand to be corrected here, but if you return part way through the U.K tax you re liable for the portion of your salary earned abroad, at what every rate bracket the salary falls into.

Thanks, yes if I return part way through a tax year the split taxation rules kick in they pro rate your annual income based on time and tax your for the U.K. percentage, can live with that and time accordingly hopefully.

[mikef]

Adam. said:

Thanks, yes if I return part way through a tax year the split taxation rules kick in they pro rate your annual income based on time and tax your for the U.K. percentage, can live with that and time accordingly hopefully.

Isn't that provided that you have worked for at least one full year outside the UK, otherwise no pro-rating (unless that has changed in recent years)

[GT03ROB]

mikef said:

Adam. said:

Thanks, yes if I return part way through a tax year the split taxation rules kick in they pro rate your annual income based on time and tax your for the U.K. percentage, can live with that and time accordingly hopefully.

Isn't that provided that you have worked for at least one full year outside the UK, otherwise no pro-rating (unless that has changed in recent years)

1 full tax year, not just 365 days

[mikef]

GT03ROB said:

1 full tax year, not just 365 days

Right, that was the change since I did it

Another way of looking at it is that the offshore income does not become tax-free until the worker has remained outside the UK for a full UK tax year (with something like 15 days home visit allowed). It's easy to fall foul of this (medical treatment, family emergencies, delayed flight out of the uK after the annual visit back, etc)) and lose the UK tax-free status on the off-shore earnings; I've seen it happen

[Spare tyre]

Have you ever spent any time there? More than a. Couple of weeks

In my opinion it’s a truly horrific place once you get bored of the marble and legalised slavery

Sadly I worked there for a bit and found it soul destroying

[Royal Jelly]

Spare tyre said:

Have you ever spent any time there? More than a. Couple of weeks

In my opinion it s a truly horrific place once you get bored of the marble and legalised slavery

Sadly I worked there for a bit and found it soul destroying

I’ve lived in Dubai for 3 years, after a decade in Hong Kong and a few years in the US. I absolutely love living here. Like any big city, If you’re bored here you’ll be bored anywhere. There’s a million things to do. It’s the same moronic views from those who don’t like it.

I find returning to the UK and seeing the decline in just about everything, the state of the high streets and society as a whole, thoroughly depressing. Horses for courses.

You may not like it, there are plenty of places I don’t like - but it works, brilliantly.

[Royal Jelly]

Spare tyre said:

Have you ever spent any time there? More than a. Couple of weeks

In my opinion it s a truly horrific place once you get bored of the marble and legalised slavery

Sadly I worked there for a bit and found it soul destroying

I’ve lived in Dubai for 3 years, after a decade in Hong Kong and a few years in the US. I absolutely love living here. Like any big city, If you’re bored here you’ll be bored anywhere. There’s a million things to do. It’s the same moronic views from those who don’t like it.

I find returning to the UK and seeing the decline in just about everything, the state of the high streets and society as a whole, thoroughly depressing. Horses for courses.

You may not like it, there are plenty of places I don’t like - but it works, brilliantly.

[Exiled Imp]

mikef said:

GT03ROB said:

1 full tax year, not just 365 days

Right, that was the change since I did it

Another way of looking at it is that the offshore income does not become tax-free until the worker has remained outside the UK for a full UK tax year (with something like 15 days home visit allowed). It's easy to fall foul of this (medical treatment, family emergencies, delayed flight out of the uK after the annual visit back, etc)) and lose the UK tax-free status on the off-shore earnings; I've seen it happen

There is no “one size fits all”. The rules applicable will depend on domestic rules in each country, and whether there is a tax treaty in place between the two. The UK has a tax treaty with the UAE. Copy here https://www.gov.uk/government/publications/united-...

Articles 4 and 14 will be applicable.

For part years (leaving / returning), Article 14 includes the standard 183 day rule (note: this applies to tax. NI rules may be different)

[Adam.]

Spare tyre said:

Have you ever spent any time there? More than a. Couple of weeks

In my opinion it s a truly horrific place once you get bored of the marble and legalised slavery

Sadly I worked there for a bit and found it soul destroying

That is a much bigger topic and I would rather not get sidelined into that argument

[Adam.]

mikef said:

Another way of looking at it is that the offshore income does not become tax-free until the worker has remained outside the UK for a full UK tax year (with something like 15 days home visit allowed).

So lets say I leave on 1st October 2025.
I would have to stay there until 5th April 2027 to not be liable to UK tax in my earnings?

If I returned on 1st April 2027 I wouldn t complete the full 26/27 tax year and would pay full UK IT on the full 18 months of Dubai earnings?

Does the number of days I can spend back in the UK vary depending on if it is the first full year or subsequent?

I thought this was 91 days per year, and 30 days working in UK?

From HMRC website: You're usually non-resident if either: you spent fewer than 16 days in the UK (or 46 days if you have not been a UK resident for the 3 previous tax years) you worked abroad full-time (averaging at least 35 hours a week), and spent fewer than 91 days in the UK, of which no more than 30 were spent working.

It s badly written and needs an “or”

Edited by Adam. on Friday 30th May 10:46

[Spare tyre]

Royal Jelly said:

Spare tyre said:

Have you ever spent any time there? More than a. Couple of weeks

In my opinion it s a truly horrific place once you get bored of the marble and legalised slavery

Sadly I worked there for a bit and found it soul destroying

I ve lived in Dubai for 3 years, after a decade in Hong Kong and a few years in the US. I absolutely love living here. Like any big city, If you re bored here you ll be bored anywhere. There s a million things to do. It s the same moronic views from those who don t like it.

I find returning to the UK and seeing the decline in just about everything, the state of the high streets and society as a whole, thoroughly depressing. Horses for courses.

You may not like it, there are plenty of places I don t like - but it works, brilliantly.

Ah good, perhaps I’m viewing it from my families perspective with my kids etc and having both had cancer

But yes a good place from a tax perspective

Not my cup of tea but different things float different boats

Good luck

[mikef]

Adam. said:

So lets say I leave on 1st October 2025.
I would have to stay there until 5th April 2027 to not be liable to UK tax in my earnings?

Minus the 15 days home leave that you're allowed in the first year

It's complicated and more so than when I was non-resident for tax - https://www.gov.uk/government/publications/residen...

All I wanted to point out are that the tax consequences of getting it wrong, or being forced to return to the UK prematurely, can be serious if it was tax that someone expected to be able to avoid

ps: on the other topic raised, I only spent a week in Dubai, waiting for a business visa for Kuwait, and that was enough for me

[muscatdxb]

The 5 year rule is for CGT so you can't move, sell your assets, then move back.

Salary income you will not be liable for tax provided you break tax residency with the UK.

[muscatdxb]

Spare tyre said:

Have you ever spent any time there? More than a. Couple of weeks

In my opinion it s a truly horrific place once you get bored of the marble and legalised slavery

Sadly I worked there for a bit and found it soul destroying

I'll balance this post out by saying that I've lived between the UK and Dubai for 10 years, think it's the best place in the world to live and would give my right arm to move there full time if I could.

[Adam.]

muscatdxb said:

The 5 year rule is for CGT so you can't move, sell your assets, then move back.

Salary income you will not be liable for tax provided you break tax residency with the UK.

Thanks for confirming

[MrBogSmith]

I've taken provisional advice on this from tax / visa specialists.

The difference is I would still be working for my UK company but all my work would be carried out outside the UK which in theory means salary wouldn't be subject to UK tax when returning.

However, I'm told there still is a salary risk from HMRC and that they may consider what my intention was and look at the context / circumstances. For example if I had drawn mostly dividends in the past to then change to the equivalent salary for the year I'm outside the UK, then it implies I am doing it for tax purposes and I could end up fighting them upon return to the UK (assuming a return under 5 years).

That may be different since you will be working for a Dubai company since HMRC have zero visibility of it (I assume!), but it may be a question to ask if you take advice to make sure.

[mikeiow]

Adam. said:

Spare tyre said:

Have you ever spent any time there? More than a. Couple of weeks

In my opinion it s a truly horrific place once you get bored of the marble and legalised slavery

Sadly I worked there for a bit and found it soul destroying

That is a much bigger topic and I would rather not get sidelined into that argument

Not sure that was an argument, just a check that you knew what you were leaping into.

Presumably you do, & have spent a few months there?