UK residents relocating to the UAE: a different fiscal architecture

The UK-to-UAE move: a different fiscal architecture

UK residents relocating to the UAE operate under a tax framework that diverges materially from the French context. The UK has no exit tax on unrealised capital gains comparable to French article 167 bis CGI. Capital gains are generally taxed only on disposal. However, the UK's statutory residence test (SRT), the recently abolished non-domiciled regime (replaced by the FIG regime since 6 April 2025), and the UK-UAE bilateral tax treaty of 12 April 2016 create their own complexity.

Statutory Residence Test (SRT)

The SRT is the cornerstone of UK tax residency. It applies a series of automatic tests followed by sufficient ties tests to determine whether an individual is UK tax resident in a given tax year (6 April – 5 April).

Automatic UK tests

• Present in the UK for 183 or more days in the tax year — automatically resident.
• Only home was in the UK for at least 91 consecutive days, with at least 30 days of UK presence.
• Working full-time in the UK for any 365-day period.

Automatic overseas tests

• Present in the UK for fewer than 16 days (where resident in any of the 3 prior tax years).
• Present in the UK for fewer than 46 days (where not resident in any of the 3 prior tax years).
• Working full-time overseas is the third automatic overseas test — a standalone test (broadly: an average of at least 35 hours per week worked abroad, fewer than 91 days spent in the UK, fewer than 31 UK workdays of more than three hours, and no significant break). The sufficient ties test only applies where none of the automatic overseas or automatic UK tests is met (RDR3; FA 2013, Sch. 45).

Sufficient ties test

If neither set of automatic tests applies, the SRT examines five connecting factors: family in the UK, accommodation in the UK, work in the UK, 90-day test, country tie. The number of UK days permitted varies inversely with the number of ties.

FIG regime (from 6 April 2025)

The non-domiciled regime was abolished on 6 April 2025 and replaced by the Foreign Income and Gains (FIG) regime, available to new UK residents who have not been UK tax resident in any of the 10 preceding tax years. Under the FIG regime, foreign income and gains arising in the first 4 years of UK residence may be exempted from UK tax, provided they are claimed on the tax return.

For UK persons relocating to the UAE, the FIG regime is irrelevant. But returning to the UK after a UAE stint may benefit from FIG if the absence has been long enough.

UK-UAE tax treaty (12 April 2016)

The UK-UAE Double Taxation Convention entered into force on 25 December 2016. It follows the OECD Model with significant variations:

• Article 4 (Residence): standard tie-breaker — permanent home, centre of vital interests, habitual abode, nationality.
• Article 13 (Capital gains): generally taxable only in the State of residence, with specific provisions for real property.
• Article 18 (Pensions): taxable only in the State of residence (unless paid by the State).
• Article 21 (Other income): residence-state taxation.

Capital gains: timing matters

The UK has no equivalent to the French exit tax. Capital gains are taxed on disposal, in the residence state of the seller. A UK person who becomes UAE resident before disposing of their portfolio generally avoids UK CGT, provided:

• They have ceased to be UK resident (split year treatment carefully managed);
• They remain non-resident for at least 5 complete tax years (otherwise the temporary non-residence rules bring back UK CGT on disposals during the absence);
• The asset is not UK situated property (UK real estate, certain UK trading assets).

UK residential property: continued exposure

Even after becoming UAE resident, UK persons retain UK exposure on:

• UK rental income: taxable in the UK under the Non-Resident Landlord Scheme.
• UK property disposals: non-resident CGT applies on disposals of UK residential property (since April 2015) and, since April 2019, of all UK land and property-rich company shares (Finance Act 2019).
• Inheritance tax: UK situs assets always remain within the scope of UK IHT. Since 6 April 2025, IHT is residence-based: a "long-term UK resident" (UK resident in at least 10 of the previous 20 tax years) remains liable on worldwide assets, with a tail of up to 10 years after departure.

Practical roadmap for a UK-to-UAE move

1. SRT analysis of departure year and split year treatment.
2. Clean break: limit UK days, sever ties.
3. Document UAE presence for the SRT and for UAE residency under Cabinet Decision No. 85 of 2022.
4. Plan disposal of investments either before departure (UK CGT applies) or after a 5-year minimum absence.
5. Manage UK property portfolio under NRL and CGT for non-residents rules.
6. Apply for a UAE Tax Residency Certificate once you satisfy the criteria of Cabinet Decision No. 85 of 2022 (183 days of presence, or 90 days with a residence permit and a permanent home or activity in the UAE, or habitual residence with centre of personal and financial interests).
7. Coordinate with a UK chartered tax adviser and a UAE counsel from day one.