The UAE has long been an attractive destination for entrepreneurs and professionals seeking a tax-efficient lifestyle. With 0% personal income tax, a fast-growing economy, and a strategic hub connecting Europe, Asia, and Africa, it’s no surprise that many UK business owners and individuals are exploring relocation to Dubai, Abu Dhabi, and beyond.
However, one of the most common misconceptions we see is the belief that simply setting up a company in the UAE or spending more time there automatically makes you non-resident for UK tax purposes. Unfortunately, UK tax law is far more complex—and without proper planning, you could remain taxable in the UK despite your move.
The UK’s Statutory Residence Test
Whether you are considered UK tax resident is determined by the Statutory Residence Test (SRT). This test is not based solely on where your company is registered or where you personally say you live. Instead, it involves a combination of factors, including:
- Days spent in the UK vs overseas
- Ties to the UK, such as property, family, or work commitments
- Previous residence history
- Where your main home and centre of life remain
Failing to meet the strict SRT criteria could mean HMRC continues to treat you as UK tax resident, even if you’ve incorporated a UAE company and are spending significant time abroad.
Common Pitfalls to Be Aware Of
- Maintaining strong UK ties
If your family, home, or ongoing business operations remain in the UK, this could anchor you to UK residency. - Splitting time incorrectly
Spending more days in the UK than the SRT allows can trigger UK residency, even unintentionally. - UK company involvement
Continuing to run a UK-based company, or having control and management of your UAE company exercised from the UK, can create complications. - Double Tax Treaties
While the UK and UAE have a treaty to prevent double taxation, it does not automatically exempt you from UK taxes if HMRC still considers you UK resident.
Why Professional Advice Is Essential
Every situation is different. For example:
- A consultant who relocates to Dubai but leaves their family home in London faces different residency risks than a family that moves together.
- A UK business owner who continues to draw income from UK sources may still have ongoing UK tax obligations.
The rules are detailed, and HMRC takes a firm stance on residency claims. Getting it wrong could mean unexpected UK tax bills, penalties, and complications with both UK and UAE compliance.
Final Thought
Moving to the UAE and setting up a company is an exciting opportunity, but it does not, by itself, sever your UK tax obligations.
To ensure you truly achieve non-resident status—and structure your affairs efficiently—specialist advice is essential before you make the move.
At AJN Accountants, we work with clients considering relocation to the UAE and advise on:
- Statutory Residence Test planning
- Double Tax Treaty application
- Structuring UK and UAE income efficiently
- Long-term tax and succession planning
Thinking of relocating to the UAE?
Get in touch with AJN Accountants today for tailored advice to safeguard your tax position before you take the leap.
