Moving Back to the UK From Dubai: Tax Consequences, Benefits, and Drawbacks

This guide outlines the updated UK tax consequences for individuals returning from Dubai, including how to determine your tax residency, navigate filing obligations, and leverage available tax reliefs under the UK–UAE double taxation agreement.

Do You Have To Pay Tax in the UK After Returning From Dubai?

Your tax obligations upon returning to the UK depend on your UK tax residency status. While non-residents are only liable for UK tax on UK-sourced income, those who become UK tax residents are subject to tax on their worldwide income and gains.

One key exception applies to temporary non-residents. You may be taxed on certain income or gains realised while abroad if both of the following conditions are met:

1. You return to the UK after living in Dubai for fewer than five complete tax years; and
2. You were a UK tax resident in at least four of the seven tax years prior to your departure.

Understanding your residency status upon repatriation is critical, as it directly determines your tax exposure and filing obligations, which differ significantly for UK tax residents and non-residents.

Tax Obligations of UK Residents

UK tax residents must declare and pay tax on their worldwide income, including income and gains earned while living in Dubai. Key taxes include:

• Income Tax: Rates range from 20% to 45%, with a personal allowance of £12,570. This allowance tapers off for incomes above £100,000 and is removed entirely at £125,140.
• Capital Gains Tax (CGT): Higher-rate taxpayers are subject to:
  • 24% on gains from residential property.
  • 28% on carried interest.
  • 20% on most other chargeable assets.
• Inheritance Tax (IHT): A standard rate of 40% applies to estates exceeding the nil-rate band (£325,000). An additional Residence Nil-Rate Band (RNRB) of £175,000 may apply if passing the main residence to direct descendants, potentially raising the total tax-free threshold to £500,000 (or £1 million for couples).
• Stamp Duty Land Tax (SDLT): Applies to UK property purchases above £125,000, ranging from 2% to 12%. An additional 3% is charged on second properties. For non-residents, a 2% surcharge applies.
• Corporation Tax: Profits up to £50,000 are taxed at 19%, with a main rate of 25% for profits above £250,000.

Tax Obligations of UK Non-Residents

UK non-residents are only taxed on UK-sourced income and UK-situated assets. They may still qualify for the personal allowance if:

• They are UK nationals,
• They are citizens of the European Economic Area (EEA) or Switzerland,
• Or they reside in a country with a double tax treaty that permits the allowance.

The personal allowance tapers for income above £100,000 and is fully withdrawn once income exceeds £125,140.

Additional UK tax obligations for non-residents include:

• Capital Gains Tax (CGT): Applies to the disposal of UK property and certain UK business assets.
• Stamp Duty Land Tax (SDLT): Charged on UK property purchases, with a 2% non-resident surcharge in addition to standard rates.
• Corporation Tax: Payable on profits derived from a UK permanent establishment (PE), even if the parent company is based in Dubai.

You may choose to disregard specific types of income – such as UK dividends, state pensions, and taxable social security payments.

However, opting to disregard this income means you must forgo your personal allowance. If you wish to retain the personal allowance, you must declare the income on your Self Assessment tax return.

How Do You Determine Your UK Tax Residency?

UK tax residency is determined under the Statutory Residence Test (SRT). You will typically be considered a UK tax resident if you spend more than 183 days in the UK within a single tax year.

If this condition is not met, the SRT applies a three-tiered assessment:

1. Automatic UK Tests.
2. Automatic Overseas Tests.
3. Sufficient Ties Test.

Automatic UK Tests

You are automatically considered a UK tax resident if any of the following apply:

1. Only home in the UK: Your only home was in the UK for at least 91 consecutive days, and you spent 30 or more days there in the tax year. If you had a home overseas, you must not have spent more than 30 days there.
2. Full-time UK work: You worked full-time in the UK for at least 365 days, spending 75% or more of those days working more than three hours per day. At least one workday must fall within the tax year being assessed.

Automatic Overseas Tests

Under the automatic overseas tests, you are automatically considered a non-resident if you meet any of the following conditions:

Sufficient Ties Test

If you do not qualify under the automatic tests, your UK tax residency will be assessed using the sufficient ties test. This test evaluates your personal and professional ties to the UK.

If you were a UK resident in any of the three previous tax years, you must also consider the country tie:

• You will have a country tie if you spent more days in the UK at midnight than in any other single country during the tax year.
• This tie is taken into account when determining your UK residency, alongside the number of other ties and total days spent in the UK.

What Are the Tax Implications of Returning to the UK From Dubai During a Tax Year?

If you return to the UK from Dubai partway through a tax year, split-year treatment may apply. This divides the year into two distinct periods:

1. A non-resident period, during which you are taxed only on UK-source income; and
2. A UK-resident period, during which you are liable for UK tax on your worldwide income and gains.

To qualify for split-year treatment, you must:

• Be non-resident in the previous tax year;
• Become UK resident under the Statutory Residence Test (SRT) in the year of return; and
• Meet one of HMRC’s specific split-year cases, such as acquiring a sole UK home, starting full-time work in the UK, or ceasing full-time work abroad.
• For example, under Case 4 (only home in the UK), you must:
  • Not have had your only home in the UK at the start of the tax year;
  • Acquire a UK home during the year and use it as your only home;
  • Continue meeting the test until the end of the tax year.

If none of the split-year criteria apply, you will be considered UK resident for the entire tax year, and taxed on your worldwide income for the full year.

How Are UK Non-Domiciled Expats Taxed Upon Returning From Dubai?

Previously, non-domiciled UK tax residents were exempt from UK tax on income sourced abroad if they were taxed on a remittance basis. Under this taxation model, foreign-earned income was taxable only when brought to the UK.

However, As of 6 April 2025, the UK has abolished the non-domicile tax regime and the associated remittance basis of taxation. In its place, a residence-based system now applies. All UK tax residents are now taxed on their worldwide income and gains, regardless of domicile.

Foreign Income and Gains (FIG) Regime

UK expats who return after a period of 10 consecutive tax years of non-residence may be eligible for the Foreign Income and Gains (FIG) regime. This provides:

• Full UK tax relief on foreign income and gains for the first four tax years of UK residency.
• No UK tax liability on such income and gains, even if remitted to the UK.

This regime is only available to those who meet the strict 10-year non-residence requirement prior to becoming a UK resident.

Transitional Reliefs for Former Non-Doms

To ease the shift from the previous remittance basis, three key reliefs apply for existing UK residents who previously claimed non-dom status:

1. Temporary Repatriation Facility (TRF): Foreign income and gains accumulated before 6 April 2025 may be remitted to the UK at a flat tax rate of 12%, available during the 2025/26 and 2026/27 tax years.
2. 50% Foreign Income Reduction (2025/26 only): Individuals taxed on the remittance basis in 2024/25 are only taxed on 50% of their foreign income arising in the 2025/26 tax year.
3. Asset Rebasing: Individuals who have paid UK tax on the remittance basis in any year between 2017 and 2025 may rebase foreign assets held on 5 April 2019 to their market value on that date. This can significantly reduce future capital gains tax exposure.

Do You Have To Notify HMRC When You Return to the UK From Dubai?

Yes, upon returning to the UK, you are required to inform His Majesty’s Revenue and Customs (HMRC) without delay.

This allows HMRC to assess your UK tax residency, determine eligibility for split-year treatment, and evaluate your state pension status.

You should complete and submit form P85 if you are returning to the UK after a period of non-residence. This form notifies HMRC of your change in residency and helps ensure correct tax coding and return filing.

You may also be eligible for a UK State Pension, provided you have at least 10 qualifying years of National Insurance (NI) contributions. A qualifying year is one in which:

• You were employed in the UK and paid NI contributions;
• You received NI credits (e.g., due to unemployment, parenting, or illness); or
• You made voluntary NI contributions while living abroad.

It is important to record the exact date of your return, as this directly affects your residency status and the period for which UK tax applies.

How Does the UK-UAE Double Tax Treaty Affect Your UK Tax Liability Upon Repatriation?

The double tax agreement (DTA) between the UK and the UAE exists to ensure that income is not taxed twice by both jurisdictions.

While the United Arab Emirates currently imposes no personal income tax, the treaty provides important structural protections in the event tax rules change in future.

The double tax treaty outlines which country has the primary right to tax specific categories of income – such as employment income, pensions, dividends, and business profits.

Where the UAE holds taxing rights and applies no personal income tax, your income is typically not taxed in either jurisdiction. If the UK has primary taxing rights, you may be taxed in the UK, but relief is provided for any foreign tax paid (if applicable).

One situation where both countries could assert taxing rights is where a business has a permanent establishment (PE) – such as a fixed office, branch, or dependent agent – in the other jurisdiction. In these cases:

• Income attributable to the PE is taxed only in the country where the PE is located;
• The other country must exempt or relieve that income from taxation in accordance with the treaty.

For example, if you operate a UK company with a branch in the UAE, the UAE has the taxing right over the branch’s profits, subject to UAE corporate tax thresholds such as the AED 375,000 exemption limit. The UK would then typically exempt those profits under the DTA or offer a tax credit, ensuring no double taxation.

Although the UAE currently imposes corporate tax only in limited cases, the DTA remains relevant if the UAE were to introduce broader personal taxation in the future.