Why your UK employee could be working remotely from Dubai

New programme lets professionals live in the emirate and work for an employer in another country

Dubai, United Arab Emirates - September 21, 2019: Standalone. A yacht in the marina on a humid day in Dubai. Saturday the 21st of September 2019. Bluewaters, Dubai. Chris Whiteoak / The National
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London-based digital director Louise Mahoney is busy scouting for talent. Ms Mahoney, who works for a UAE retail brand, wants to hire two freelancers through a UK agency to work in a creative studio in Dubai.

The new staff members may qualify for Dubai’s new remote-working programme, she says, which allows professionals to live in the emirate while employed by companies overseas.

The initiative, unveiled earlier this month, aims to encourage global workers to relocate to Dubai, a move Ms Mahoney, a former Dubai resident herself, says many people would want to do.

“Dubai’s outdoor lifestyle and the climate are very attractive if you’re from the UK because our main gripe is the climate,” says Ms Mahoney, who lived in the UAE for seven years.

“So if you are able to do the same job and be as efficient as you were in the office in London or sitting on your computer at home, then it makes sense.”

If you can work effectively without going to the office or meeting colleagues and clients face-to-face, then you don't necessarily have to be in the same country.

Through Dubai’s new programme, remote workers have access to the same services as permanent residents, such as phone and internet, utilities and schooling. However, to be eligible they must have a minimum average monthly salary of $5,000, an employment contract with one-year’s validity and health insurance that covers the UAE.

One issue with the scheme, says Ms Mahoney, is the individual’s tax liability. Because her new hires would be on the UK company’s pay roll, she has been advised they would still be liable for UK tax.

This is not necessarily the case, says Stuart Ritchie, director of wealth advice at financial advisory firm AES International, which has clients in the UK and the UAE.

“British employees may not pay UK tax on overseas earnings provided they are non-resident and as long as they are out of the country for an entire tax year which runs from April to April,” says Mr Ritchie.

However, workers must not spend more time in the UK in a tax year than they are entitled to under the UK's guidelines, otherwise their worldwide income is subject to UK tax, says Christopher Davies, a chartered financial planner at The Fry Group.

“You may be back in the UK for many reasons but avoiding the summer heat in the Gulf along with general and work trips back to the UK throughout the year many bring you into UK tax residency by way of your UK day count,“ he says. “In particular any work days undertaken in the UK are likely to give rise to a UK tax charge on this element of your income.”

Other countries might not be as accommodating on tax. In the US, for example, a US citizen is still liable for tax on their worldwide income, says Len Wolf, director at The Wolf Group, a US-based international tax accountancy.

If they qualify for the Foreign Earned Income Exclusion, they can exclude up to $107,600 of their foreign wages for the tax year.

"He or she may also be able to exclude or deduct an amount for his or her foreign housing costs," says Mr Wolf.

However, they may still have to pay state income tax if they remain domiciled in their tax state and could also be subject to social security and Medicare taxes.

"The US tax code is extremely complicated," he adds.

Covid-19 accelerated the shift to remote working when countries across the globe sent employees home to help contain the spread of the virus.

However, as restrictions eased, more workers returned to the office with 65 per cent of employees commuting to work in the UK from October 7 to 11, according to recent data from the Office for National Statistics.

With some employers now ditching permanent offices altogether, would they understand if an employee wanted to do their job from another country?

“If you can work effectively without going to the office or meeting colleagues and clients face-to-face, then you don't necessarily have to be in the same country. Good Wi-Fi and a willingness to work across time zones is all you need,” says Steve Cronin, the founder of Deadsimplesaving.com, an independent community for financial education in the UAE.

Rebecca Siciliano, managing director of Tiger Recruitment (centre). Ms Siciliano says UK employers will need much more detailed information about the legalities, tax and payroll implications of employing someone who lives in Dubai under the new programme. Courtesy Tiger Recruitment

The pandemic has driven greater acceptance of remote working, says Rebecca Siciliano, managing director of Tiger Recruitment, which has offices in London, the US and UAE, as businesses have realised that people don’t need to be in the office in order to be productive.

“But it varies,” she says. “Some UK organisations have said that they will retain flexible working even after ‘normal’ life returns, while others can’t wait to have their employees back in the office.

Mr Cronin says Dubai’s scheme is ideal for those who have always dreamed of living in the UAE whose job might be keeping them elsewhere.

“Equally, if you have lost your job in the UAE, you might be able to find one overseas without having to leave the UAE. This can bring a sense of stability to your time in the UAE, especially if you have children in schools and other ties that had previously been missing when your time in the UAE was inextricably linked to your employment here,” he says.

But the idea of living in one country and working in another might too far-fetched for some employers.

"For UK employers, they’ll need much more detailed information about the legalities, tax and payroll implications of employing someone who lives in Dubai under the new programme. How will it work in practice? In today’s candidate-rich market, employers can afford to be selective and a candidate that comes with added complications may be passed over," says Ms Siciliano.

Kate Palmer, HR advice and consultancy director at Peninsula, says it does not matter where an employee is located if it isn’t in the office. Courtesy Kate Palmer

Kate Palmer, HR advice and consultancy director at global employment law consultancy, Peninsula, says many employers have chosen to keep staff working from home since the restrictions have been lifted.

“Health, safety and wellbeing may well have played a large role in this decision, but the employer’s mind-set will also have factored heavily. If working from home was not effective, many employers “would not have allowed its continuation. In many ways, it does not matter where the employee is located if it isn’t in the office," says Ms Palmer.

One person who understands how easy working in a different country to their employer can be is former Dubai resident Anthony Dixon.

He relocated to the UK this summer after 12 years in the UAE working as a senior associate director for a UAE property company, after working from home during the crisis made him realise he could do the same job from anywhere.

“This situation wouldn’t have happened before Covid,” he says. “I don’t think people would have believed you could trust your employees to be working full-time in a different country in those kind of roles that did not need to be on the ground or hands on. There was a stigma to that and Covid removed that obstacle by proving that it did work and people could be trusted.”

Mr Dixon now works full-time for his Dubai employer from the UK on a consultancy contract, so that his company no longer needs to pay for a visa, medical costs or other allowances, such as an end-of-service gratuity.

“They benefit from the cost breaks and I’m wanting to be in the UK and just take it on the chin that I’m going to get taxed, but I’ve been able to sort it out with my company that I’m paid enough to not worry about that that too much,” he says.

Captured at Kings Place on 20Jun, 2019 by Nisha Haq Photography

But would UK employers be as accommodative if their employee decided to relocate their home to the Middle East?

"Quite possibly," says Carl Reader, chairman of UK chartered accountancy business d&t. His new book Boss It encourages readers to take control of their time, income and lives.

Mr Reader says the Dubai opportunity allows employees to choose how they work and the circumstances in which they work, however, he says not all employers have adapted to remote working well.

“Sometimes, things just need to be done face to face, and in other cases some businesses just simply didn't have the tech resources to work effectively remotely,” he says.

“I think the biggest impact for businesses that are looking to leap into a global workforce is around culture and how they maintain their team dynamics without a central 'hub' for people to chat, drink coffee, and get to know each other.”

Ms Palmer says industries the Dubai programme would not work for include those that require a hands-on approach such as healthcare and retail.

“Desk jobs which are more dependent on the work being done, rather than when it is done, would suit remote working in another country, including jobs ranging from data input to research roles to tech roles,” she says.

However, a sense of team and inclusion can often be missing when employees work remotely, and this could be exacerbated when different time zones are in play.

Ultimately though, an employee living in an entirely different country to the one they work is no longer such a crazy concept.

“If work can be performed in the office, and performed equally well 10 miles away from the office, then by extension it should be able to be performed 1,000 miles away,” says Mr Reader.

“The challenge will be around colleague to colleague communications - and my big question is this: can human relationships be effectively virtualised? We won't know the answer to this for some time, but it'll become clearer post-Covid.”