Can I avoid paying UK tax on UAE earnings if I relocate?

Anyone who is resident outside of the UK for less than a full tax year remains UK tax resident and thus subject to UK income tax on their worldwide income. Reuters

Question: I moved to Dubai in January. I had a job, and it was kind of OK until recently, but a change of management has led to a toxic work environment, so I have resigned. I am struggling to find another job so am thinking of going back to the UK. My worry is if I do that, I might have to pay tax in the UK on the money I have earned here. Is there a way I can avoid paying tax if I go back there next month? CM, Dubai

Answer: This is an important question, not least with so many people moving to the UAE from the UK. From what I have seen, only few have an understanding of their personal tax liabilities when leaving the UK or moving back. There are similar considerations for many countries that levy personal income tax but I will answer in respect of UK tax here.

In brief, as UK tax is a complex topic, simply leaving the UK to move to another country does not mean a person is automatically exempt from taxes there. For income earned in the UAE, for it to be exempt from UK income tax, a person needs to be deemed tax resident in the UAE and that means they must be resident outside of the UK for a minimum of one full tax year. The UK tax year is from April 6 to April 5 the following year.

Anyone who is resident outside of the UK for less than a full tax year remains a UK tax resident and thus subject to UK income tax on their worldwide income.

This means that if CM left the UK in January 2025, she would need to remain outside of the UK until at least April 6, 2026 to complete a full tax year as non-resident. If she returns to the UK in October 2025, all of her UAE income is deemed taxable in the UK, just as if it was earned there as she will have been legally tax resident throughout her time in the UAE.

The onus is on the person to declare the overseas income and failure to do so is tax evasion. A person can be subject to substantial penalties and fines for failing to declare taxable income. In some cases, this can be equal to the total tax owed and more.

Once a person goes back to being employed in the UK, or sets up a business, they are likely to be asked about the “missing period” and must then declare all earnings. Not disclosing can even be a criminal issue. Strictly speaking they should declare the overseas income even if not asked as the onus is on the person to be honest.

Note that during the full UK tax year, even the first one overseas, a person can visit the UK but only for a limited amount of time. The actual number of days will vary depending on their personal circumstances, where they have been resident during the past three tax years, and what are deemed “connecting factors”. In most cases, it will be no less than 45 days but professional advice should be taken for confirmation.

Q: My question is about annual leave when working in Saudi Arabia as my company has asked me to transfer. I understand that my employment in the UAE ends legally and I start over when I move to Saudi Arabia. How does it work with annual leave? My current contract states 30 days of leave but the new one I have been sent says I only get 21 days. The HR department says that is Saudi law but I don’t think it is fair to penalise me. Can I be given more in a contract? DF, Abu Dhabi

A: The provision of annual leave is as stated in the Saudi labour law. Article 109 states: “A worker shall be entitled to a prepaid annual leave of not less than 21 days, to be increased to a period of not less than 30 days if the worker spends five consecutive years in the service of the employer.”

This is the standard wording and the minimum that any employee must be given. There is no reason why an employer cannot amend this to give additional days of leave to correspond with the amount DF currently receives. No doubt a senior member of staff will need to provide instruction to the HR department. Confirmation should be provided in writing on an official basis.

Any employer can provide benefits in addition to those stated in the law but cannot reduce them to the detriment of the employee.

In all cases, an employee in Saudi Arabia is entitled to the official holidays as declared by the government.

Contact Keren Bobker at [e-mail] or at www.financialuae.com. The advice provided in our columns does not constitute legal advice and is provided for information only