Tax Implications Around Moving to Dubai from the UK

Dubai has become a hugely popular destination for UK residents looking for career opportunities, lifestyle benefits, and of course, the favourable tax regime. The UAE does not levy personal income tax, capital gains tax, or inheritance tax making it one of the most attractive places in the world for expats.

However, moving to Dubai doesn’t mean you can automatically ignore your UK tax obligations. If you are leaving the UK permanently or for an extended period, you’ll need to make sure HMRC is properly informed and that you understand how tax rules will apply to any income or assets you still hold here.

In this guide, we’ll cover what you need to know about taxes in Dubai, your UK tax position after moving, and the key issues to consider if you ever decide to move back.

Taxes in Dubai: Do You Pay Any?

One of the main draws of moving to Dubai is the absence of personal income tax. Whether you are employed or self-employed, you won’t pay income tax on your earnings in Dubai.

That said, there are some other taxes and fees to be aware of:

• No capital gains tax – profits from selling shares, investments, or property in Dubai are not taxed.
• No inheritance tax – assets can be passed on without estate duties.
• VAT – a 5% value-added tax applies on most goods and services.
• Housing/municipality tax – typically around 5% of annual rent for non-UAE nationals.
• Corporate tax – from 2023, a 9% rate applies to company profits above AED 375,000.

So while Dubai is often described as “tax-free,” it’s more accurate to say that there is no personal income or capital gains tax.

Notifying HMRC When You Move

When you leave the UK, it’s important to notify HMRC of your change in residency:

• If you usually file a self-assessment return, you should report your new residency status in that return.
• If you don’t usually complete self-assessment, you’ll need to submit Form P85 online to confirm you’ve left the UK.

In many cases, you may also qualify for split-year treatment, meaning you only pay UK tax on your worldwide income for part of the tax year before you left.

Your UK Tax Position as a Dubai Resident

Once you are non-UK resident under the Statutory Residence Test, you’ll only pay UK tax on UK-sourced income. Common examples include:

• Rental income from UK properties.
• UK employment income if you continue to work for a UK employer.
• Dividends or distributions from UK companies.
• UK pensions – although under the UK–UAE Double Tax Treaty, many pensions can be paid gross.

You will not be taxed in the UK on income you earn in Dubai, as long as you are correctly classed as non-resident.

UK Rental Income and Capital Gains

For many expats, UK property remains a key tax exposure:

• Rental income – taxed at standard UK income tax rates (20%, 40%, or 45%). Most UK and EU citizens can still claim the personal allowance (£12,570).
• Capital Gains Tax (CGT) – payable if you sell a UK residential property for more than you paid. The rates are 18% (basic rate taxpayers) or 28% (higher rate taxpayers).
• Non-Resident Capital Gains Tax (NRCGT) rules mean even non-residents must report and pay CGT on UK property sales.

Inheritance Tax (IHT)

Even if you leave the UK, you may still be considered UK domiciled for inheritance tax purposes.

You are treated as UK domiciled if:

• You lived in the UK for at least 15 of the last 20 years, or
• You had a permanent UK home in the last 3 years before your death.

If UK domiciled, your worldwide estate is subject to UK IHT at 40% above the nil-rate band (£325,000).

If you are non-UK domiciled, only your UK assets (such as property or bank accounts) will be liable for IHT.

Visiting the UK After Moving to Dubai

Becoming non-resident doesn’t mean you cannot visit the UK – but there are limits:

• If you work full-time in Dubai, you can usually spend up to 90 days in the UK each year, provided no more than 30 of those are working days.
• Your residency position is determined by the Statutory Residence Test, which includes the Sufficient Ties Test. This considers factors like family ties, property, and work connections.

If you breach the day/tie limits, you risk becoming UK resident again and being taxed on worldwide income.

Moving Back to the UK

If you return to the UK within five years of leaving, the temporary non-residence rules can apply. This means certain gains or income earned abroad while you were non-resident may become taxable when you come back.

If you return after five years, you generally won’t face UK tax on income and gains earned in Dubai during your non-resident period.

Key Takeaways

• Dubai has no income tax, capital gains tax, or inheritance tax – but VAT, housing tax, and corporate tax may apply.
• You must notify HMRC of your departure using self-assessment or Form P85.
• As a non-UK resident, you only pay UK tax on UK-sourced income (rental, pensions, etc.).
• UK property remains taxable for both rental income and CGT.
• Inheritance tax depends on domicile, not just residency.
• Returning to the UK within five years can trigger backdated tax under temporary non-residence rules.

At UK Landlord Tax, we help expats and landlords understand their ongoing UK obligations, complete the Sufficient Ties Test, and plan their tax affairs effectively while living abroad.

If you’re considering moving to Dubai or are already an expat and need clarity on your UK tax position, call us on 01902 711370 or email enquiries@uklandlordtax.co.uk for expert advice.

Thandi Nicholls Ltd
Creative Industries Centre
Glaisher Drive
Wolverhampton
West Midlands
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