UAE Relocation Planning

International Tax | Residence Planning

A UK-resident entrepreneur with significant wealth was considering relocating to the United Arab Emirates.

The client had built a successful business in the UK, had substantial investments, and was attracted by the UAE's favourable tax environment and lifestyle.

However, they were concerned about the tax implications of leaving the UK and wanted to ensure the move was properly planned.

Relocation planning for high-net-worth individuals requires careful consideration of multiple tax issues:

Departure from the UK does not immediately end UK tax obligations. The statutory residence test determines when an individual becomes non-UK resident, and there is often a period of transition during which the individual may retain UK residence despite spending time overseas.

Certain types of income and gains remain taxable in the UK even after departure. UK source income continues to be taxable, and there are special rules for gains on UK residential property.

The "temporary non-residence" rules can bring gains back into charge if an individual returns to the UK within five years of departure. This is a trap for those who leave intending to remain overseas but later change their plans.

Pension arrangements require careful consideration. Transfers to overseas pension schemes may trigger tax charges, and the treatment of pension income after departure depends on the relevant double tax treaty (UK / UAE one being a favourable one).

We prepared a comprehensive relocation plan for the client, which addressed all of these issues and more:

We analysed the client's circumstances against the statutory residence test and identified the optimal timing for departure to ensure clean non-residence from the following tax year.

We reviewed the client's asset portfolio and identified assets with significant unrealised gains.

We considered the client's UK property holdings and advised on the ongoing UK tax obligations that would continue after departure.

We reviewed the client's pension arrangements and advised on the options available, including the tax treatment of pension contributions and withdrawals after becoming non-UK resident.

We prepared a detailed timeline setting out the steps to be taken before, during, and after the move, including administrative matters such as updating HMRC, closing UK bank accounts, and establishing UAE residence.

We also considered the commercial implications for the client's UK business interests and advised on restructuring to ensure that business income would not continue to be taxable in the UK after departure.

Outcome

Detailed relocation plan delivered with projected tax savings quantified at over seven figures.

Client successfully relocated to the UAE with clean non-residence status and restructured business arrangements.

This case study is based on a real client matter. All identifying details have been removed or changed to protect client confidentiality.