TL;DR
- Save approximately £59,000/year on £200k profit88% tax reduction
- UAE corporate tax is 9% above AED 375,000Zero personal income tax
- Must remain non-UK resident for 5+ complete tax yearsAvoid temporary non-residence trap
- Free zone company setup costs £3,200 to £10,800DMCC, IFZA, Meydan popular
💡Quick reference summary. Continue reading for comprehensive analysis and context.
Important: This guide is for general information only and does not constitute tax, legal, or financial advice. Tax rules are complex and depend on your individual circumstances. Always consult a qualified tax adviser before making decisions about international relocation. Alto Accounting can help you navigate these complexities.
Quick Summary: What You Need to Know
The UK tax burden is now projected to hit 38% of GDP by 2026. The non-dom regime ended in April 2025. Corporation Tax sits at 25%. Dividend tax rates keep climbing. If you are running a profitable marketing agency, you have probably wondered: is there a better way?
For many UK agency owners, Dubai offers a compelling alternative. Zero personal income tax. 9% corporate tax (with a generous threshold). World-class infrastructure. And a timezone that works for UK and Asian clients alike. With the 2026 dividend tax increase making extraction even costlier, the case for relocation is stronger than ever.
But relocating to Dubai is not as simple as booking a flight and setting up a company. HMRC has strict rules about tax residence. The UAE has its own compliance requirements. And getting the structure wrong can cost you more than you save. This guide covers everything UK agency owners need to know about relocating to Dubai: the tax implications, company formation, visa options, and the common mistakes that trip people up.
The Tax Case for Dubai: How Much Can You Actually Save?
Let us start with the numbers. Here is how the tax burden compares for a UK agency owner taking £200,000 profit from their business:
🇬🇧UK Tax Calculation
🇦🇪Dubai Tax Calculation
Annual Saving: £58,900
On £200,000 profit, relocating to Dubai saves approximately £59,000 per year in tax. Over 5 years, that is £295,000. Of course, this assumes you properly exit UK tax residence and structure everything correctly. Get it wrong, and HMRC will still come calling.
These numbers explain why HMRC reports that 16,500 millionaires are expected to leave the UK in 2025 alone. The April 2025 changes to the non-dom regime have accelerated this trend significantly.
Understanding UK Tax Exit: The Statutory Residence Test
Here is where most people get it wrong. Moving to Dubai does not automatically make you non-UK resident for tax purposes. HMRC uses the Statutory Residence Test (SRT) to determine where you should pay tax, and it is more complex than counting days.
The Three Parts of the SRT
1. Automatic Overseas Test
You are automatically non-resident if you: were non-resident in the previous 3 tax years AND spend fewer than 46 days in the UK, OR you work full-time overseas AND spend fewer than 91 days in UK (with fewer than 31 workdays).
2. Automatic UK Test
You are automatically UK resident if you: spend 183+ days in the UK, OR your only home is in the UK, OR you work full-time in the UK.
3. Sufficient Ties Test
If neither automatic test applies, HMRC counts your UK ties (family, accommodation, work, 90-day presence, country tie) and cross-references with days spent in UK. More ties = fewer days allowed.
The UK Ties That Count Against You
Accommodation Tie
You have a UK home available for 91+ consecutive days, and you spend at least one night there. This is why keeping your UK house "available" is dangerous. Rent it out on a 12-month tenancy or sell it.
Family Tie
Your spouse, civil partner, or minor children are UK resident. This tie is powerful. If your family stays in the UK while you move to Dubai, you likely maintain a family tie.
Work Tie
You work in the UK for 40+ days in the tax year (3+ hours per day counts as a workday). Virtual meetings from Dubai do not count, but flying back for UK client meetings does.
90-Day Tie
You spent 90+ days in the UK in either of the previous two tax years. If you have been UK resident for years, this tie will apply automatically for the first two years after you leave.
Country Tie
The UK is the country where you were present at midnight for the greatest number of days. Only applies if you were UK resident in at least one of the previous three tax years.
| UK Ties | Max UK Days (if UK resident in any of prior 3 years) | Max UK Days (if NOT UK resident in prior 3 years) |
|---|---|---|
| 4 or more ties | 15 days | 45 days |
| 3 ties | 45 days | 90 days |
| 2 ties | 90 days | 120 days |
| 1 tie | 120 days | 182 days |
| No ties | 182 days | 182 days |
The practical reality: Most UK agency owners relocating to Dubai will have 2-3 ties in their first years (90-day history, possibly family or accommodation). This means limiting UK visits to 45-90 days per tax year. Plan your travel carefully and keep records.
Split Year Treatment: Reducing Tax in Your Departure Year
If you leave the UK partway through a tax year, you may qualify for split year treatment. This means the tax year is divided into a UK portion and an overseas portion. You are only taxed on worldwide income for the UK portion.
Case 3: Ceasing to Have a UK Home
Most relevant for agency owners. To qualify:
- You were UK resident in the previous tax year
- You had a UK home at the start of the tax year
- You cease to have any UK home during the year
- You acquire a home overseas and are present there
- You spend fewer than 16 days in the UK after ceasing to have a UK home
Example: You sell your UK home on 1 July 2026 and move to Dubai. From 1 July onwards, you spend only 10 days in the UK visiting family. You would be treated as UK resident from 6 April to 30 June (for UK income tax purposes) and non-resident from 1 July to 5 April. Income earned from your Dubai business after 1 July would not be UK taxable.
UAE Company Formation: Free Zone vs Mainland
Once you have planned your UK exit, you need a UAE business structure. The main choice is between a free zone company and a mainland company. For most UK agency owners serving international clients, free zones are the better option.
Free Zone Company
Best for: international clients, service businesses, digital agencies
Mainland Company
Best for: local UAE clients, retail, government contracts
Popular Free Zones for UK Agency Owners
DMCC (Dubai Multi Commodities Centre)
The largest free zone with 25,000+ companies. Strong reputation, excellent networking, premium address. Setup from AED 25,000 (£5,400). Good for established agencies wanting credibility.
IFZA (International Free Zone Authority)
Popular with startups and consultants. Lower costs, flexible packages. Setup from AED 15,000 (£3,200). Fast processing. Good for solo agency owners or small teams.
Meydan Free Zone
Modern, competitive pricing, good facilities. Setup from AED 18,000 (£3,900). Growing in popularity. Good balance of cost and prestige.
DIFC (Dubai International Financial Centre)
Premium financial hub with common law jurisdiction. Higher costs but excellent for finance-adjacent agencies. Setup from AED 50,000+ (£10,800+). Best for high-end consultancies.
UAE Corporate Tax: What You Actually Pay
The UAE introduced federal corporate tax in June 2023. Here is how it works:
UAE Corporate Tax Rates (2026)
Small Business Relief: If your UAE business turnover is under AED 3 million (approximately £650,000), you can elect for Small Business Relief and pay 0% corporate tax until 31 December 2026. This covers most agency owners in their first years.
No personal taxes: The UAE has no personal income tax, no capital gains tax on personal investments, and no inheritance tax. Dividends from your UAE company to you personally are tax-free. Salary you pay yourself is tax-free. This is where the real savings come from. Compare this to the UK where you need to carefully plan your optimal director salary to minimise tax.
Economic Substance Regulations (ESR)
The UAE introduced Economic Substance Regulations in 2019 to comply with international standards. If your UAE company conducts certain "Relevant Activities", you must demonstrate genuine economic substance in the UAE.
Relevant Activities Under ESR
Good News for Agency Owners
Most marketing and digital agency activities do not fall under ESR "Relevant Activities". If you are providing marketing services, consulting, or creative services to clients, ESR likely does not apply to you. However, if you hold intellectual property (trademarks, software IP) or have a holding company structure, you may need to demonstrate substance. This typically means having adequate employees, premises, and decision-making in the UAE.
Visa Options for UK Agency Owners
To live and work in Dubai, you need a residence visa. There are several options:
Investor/Entrepreneur Visa (via Free Zone)
The standard option. Your free zone company sponsors your visa as an investor/partner.
- Duration: 2-3 years, renewable
- Cost: Included in company setup (AED 3,000-5,000 for visa processing)
- Family: Can sponsor spouse and children (salary threshold applies)
- Best for: Most agency owners
Golden Visa (10 Years)
Long-term residence for investors, entrepreneurs, and skilled professionals.
- Investor route: AED 2 million property investment (approximately £430,000)
- Entrepreneur route: Approved startup or project valued at AED 500,000+
- Duration: 10 years, renewable
- Family: Sponsor spouse, children (any age), and parents
- Best for: Agency owners planning long-term UAE residence
Freelance Visa
For solo consultants and contractors.
- Cost: AED 7,500-15,000 (£1,600-3,200) per year
- Duration: 1-2 years, renewable
- Family: Can sponsor with minimum salary (AED 6,000-10,000/month)
- Best for: Solo agency owners, contractors, consultants
Common Mistakes UK Business Owners Make
HMRC is actively targeting "stealth expats" who relocate to Dubai but fail to properly exit UK tax residence. Here are the mistakes that trip people up:
1. Assuming Physical Relocation = Tax Non-Residence
Moving to Dubai does not automatically make you non-UK resident. HMRC uses the Statutory Residence Test, not your physical address. You must actively meet the SRT requirements and limit UK ties.
2. Keeping a UK Home "Available"
If your UK property remains available for your use for 91+ consecutive days, you have an accommodation tie. Leaving furniture in place, keeping utilities connected, or having family stay there periodically can all count. Sell, rent out on a 12+ month tenancy, or accept the tie.
3. Managing UK Company from Abroad
If you are the sole director of a UK limited company and make all decisions from Dubai, HMRC may argue the company has dual residence or that "central management and control" is in the UAE. You may need to appoint UK-based directors or restructure. Also watch your director's loan account if you have outstanding balances.
4. The Temporary Non-Residence Trap
Return to the UK within 5 complete tax years and HMRC can retrospectively tax capital gains and certain income earned while abroad. If you sell shares, property, or other assets while in Dubai, those gains may be taxed when you return. Plan for 5+ years abroad.
5. Not Notifying HMRC Properly
You must complete form P85 or SA109 when leaving the UK. Many people forget or assume HMRC will "know" they have left. Failure to notify can result in incorrect tax assessments and penalties.
6. Ignoring UK Inheritance Tax
UK Inheritance Tax applies to your worldwide assets if you have been UK resident for 10 of the past 20 years. Becoming non-resident does not immediately escape IHT. You need 10 years of non-residence to fully exit the IHT net on non-UK assets.
Avoid Costly Mistakes
The intersection of UK and UAE tax law is complex. Getting professional advice before you move can save you from expensive errors and HMRC investigations.
Cost of Living in Dubai: What to Budget
Dubai is not cheap, but the tax savings often more than compensate. Here are realistic 2026 costs for a UK agency owner:
| Expense | Monthly (AED) | Monthly (GBP) | Notes |
|---|---|---|---|
| 1-bed apartment (city) | AED 6,000-10,000 | £1,300-2,150 | Marina, JLT, Business Bay |
| 2-bed apartment (city) | AED 10,000-16,000 | £2,150-3,450 | Good for families |
| Utilities (DEWA) | AED 500-1,500 | £100-325 | AC is expensive in summer |
| Health insurance | AED 500-2,000 | £100-430 | Mandatory; quality varies |
| Groceries | AED 2,000-4,000 | £430-860 | Imported goods cost more |
| Transport (car lease) | AED 1,500-4,000 | £325-860 | Or use taxis/Metro |
| School fees (international) | AED 4,000-15,000 | £860-3,200 | Per child; varies hugely |
Realistic budget: A single agency owner can live comfortably on AED 15,000-20,000/month (£3,200-4,300). A family of four should budget AED 30,000-50,000/month (£6,500-10,800) depending on school choices and lifestyle. Make sure you have proper cash flow management in place before relocating.
Banking in the UAE
You will need both personal and business bank accounts. UAE banking has become easier for expats but still has quirks:
Personal Banking
- Requirements: Emirates ID, residence visa, proof of address, salary certificate or income proof
- Popular banks: Emirates NBD, Mashreq, ADCB, FAB
- Timeline: 1-2 weeks once documents submitted
- Tip: Mashreq NeoBiz and Wio offer faster digital onboarding
Business Banking
- Requirements: Trade license, MOA, shareholder passports, Emirates IDs, office tenancy
- Minimum balance: AED 25,000-100,000 depending on bank
- Timeline: 2-6 weeks (enhanced due diligence)
- Tip: Free zones often have banking partnerships that speed this up
Alternative: Multi-currency accounts like Wise Business or WorldFirst can help bridge the gap while UAE accounts are being set up. They let you receive GBP and convert to AED easily.
UK-UAE Double Tax Treaty: Avoiding Double Taxation
The UK and UAE have a comprehensive double tax treaty (signed 2016) that prevents you being taxed twice on the same income. This is crucial when transitioning between the two jurisdictions.
Key Treaty Provisions
- Business profits: Only taxed where the business has a "permanent establishment". Your UAE company is only taxed in UAE; your UK company is only taxed in UK.
- Dividends: Maximum 15% withholding tax (but UK has no withholding on dividends, and UAE has no dividend tax, so effectively 0%).
- Capital gains: Generally taxed only in your country of residence. If you are UAE resident and sell UK shares, no UK CGT applies (with exceptions for UK property).
- UK property income: Rental income from UK property is always taxable in UK, but you get credit in UAE (where there is no tax anyway).
- Pensions: UK pension income is generally only taxable in the UK, even if you are UAE resident.
Important: The treaty only helps if you are genuinely tax resident in the UAE. You may need a UAE Tax Residency Certificate from the Ministry of Finance to claim treaty benefits. This requires being physically present in the UAE for at least 183 days per year.
VAT: UK vs UAE Comparison
VAT is often overlooked in relocation planning, but the difference between UK and UAE rates can add significant savings, especially if you have EU or UK clients.
🇬🇧UK VAT
- Standard rate: 20%
- Registration threshold: £90,000 turnover
- B2B services to EU: Reverse charge (0%)
- B2C services to EU: Complex rules, often 20%
- Non-EU clients: Generally 0% (outside scope)
- Quarterly returns: Yes, with MTD requirements
🇦🇪UAE VAT
- Standard rate: 5%
- Registration threshold: AED 375,000 (£81,000)
- Export of services: 0% (zero-rated)
- Services to UK/EU clients: 0% (zero-rated export)
- Free zone to free zone: Often 0%
- Returns: Quarterly or monthly depending on turnover
VAT Impact for UK-Focused Agencies
If your agency primarily serves UK clients, your services are likely zero-rated exports from the UAE. This means you charge 0% VAT (vs 20% in the UK) while still being able to reclaim UAE VAT on business expenses. For agencies with significant UK B2C clients, this alone can improve your competitive position or margins by up to 20%.
Frequently Asked Questions
How much tax can I save by moving to Dubai from the UK?
A UK agency owner earning £200,000 profit pays approximately £67,000 in tax (Corporation Tax plus dividend tax). In Dubai, the same income attracts 9% corporate tax above AED 375,000 (roughly £8,000) and zero personal income tax on dividends. Net saving: approximately £59,000 annually, or 88% reduction in tax burden. The exact figure depends on your personal circumstances, salary structure, and how you extract profits.
Do I need to sell my UK company before moving to Dubai?
Not necessarily. You can keep your UK limited company, but be aware that if you manage it from Dubai, HMRC may still consider it UK tax resident based on where "central management and control" occurs. Options include: appointing UK-based directors to make key decisions, setting up a new UAE company and winding down the UK entity, or operating dual structures with proper transfer pricing. Professional advice is essential here.
What is the Statutory Residence Test and why does it matter?
The Statutory Residence Test (SRT) is HMRC's framework for determining your UK tax residency. It includes automatic tests (days spent in UK, having a UK home, working full-time overseas) and a "sufficient ties" test that counts connections like family, accommodation, work, and historical presence. Failing the SRT means HMRC can tax your worldwide income. You must carefully track UK days and actively manage your ties.
What is the difference between Dubai free zone and mainland company?
Free zones offer 100% foreign ownership, zero customs duties, virtual office options, and faster setup (days vs weeks). However, you cannot trade directly with UAE consumers or bid on government contracts. Mainland companies can operate anywhere in the UAE but require physical offices and have more complex registration. For UK agency owners serving international clients remotely, free zones like DMCC, IFZA, or Meydan are typically the better choice.
How much does it cost to set up a company in Dubai?
Free zone company setup costs AED 15,000 to AED 50,000 (£3,200 to £10,800) depending on the zone and visa requirements. This typically includes trade license, registration fees, and a flexi-desk or virtual office for the first year. Annual renewal runs 60-80% of initial cost. Mainland companies cost slightly more due to additional requirements like physical office leases and local agent fees where applicable.
Can I get a Golden Visa as an agency owner?
Yes. Golden Visa options for agency owners include: the investor route (AED 2 million property or business investment), entrepreneur route (approved startup or innovation project valued at AED 500,000+), and skilled professional route (certain qualifications and salary thresholds). Golden Visas are valid for 10 years, renewable, and allow you to sponsor family members including spouse, children of any age, and parents.
What happens to my UK property if I move to Dubai?
Keeping a UK property "available for your use" creates an accommodation tie under the SRT, potentially preventing you from becoming non-resident. Your options: sell the property before departure, rent it out on a long-term tenancy (minimum 12 months with genuine third-party tenants), or accept you will maintain this tie. Note: rental income from UK property remains taxable in the UK regardless of your residence status, though you may get relief under the UK-UAE double tax treaty.
How do I notify HMRC when leaving the UK?
Complete form P85 (Leaving the UK) if you are leaving employment, or include SA109 (residence pages) in your Self Assessment return. You need to provide your departure date, new overseas address, and details of any UK income you will continue to receive. If you are claiming split year treatment, this is done through your Self Assessment return, not a separate form. Failure to notify HMRC properly can result in incorrect tax assessments and potential penalties.
What is the temporary non-residence rule?
If you leave the UK for fewer than 5 complete tax years (6 April to 5 April), HMRC can retrospectively tax capital gains and certain income earned while abroad when you return. This "temporary non-residence" trap catches people who sell company shares or assets while in Dubai, then return to the UK within 5 years. To fully escape, you must remain non-UK resident for at least 5 full tax years.
Is UAE corporate tax really only 9%?
Yes. UAE corporate tax (introduced June 2023) is 0% on profits up to AED 375,000 (approximately £81,000), then 9% on profits above that threshold. Additionally, Small Business Relief extends the 0% rate to businesses with turnover under AED 3 million until December 2026. There is no personal income tax, no capital gains tax on personal investments, and no inheritance tax in the UAE. Dividends from your UAE company to you personally are completely tax-free.
Can I still work with UK clients from Dubai?
Absolutely. Many UK agency owners relocate to Dubai while keeping their UK client base. The key considerations are: structuring contracts so your UAE company invoices clients (not you personally), avoiding creating a UK "permanent establishment" through your activities, and ensuring you personally are not working in the UK for more than 30 days per tax year. Your physical location does not limit who you can serve globally.
What are the biggest mistakes UK business owners make when moving to Dubai?
The most common mistakes include: assuming physical relocation equals tax non-residence (it does not), keeping a UK home available for use (creates accommodation tie), managing UK companies from abroad without restructuring (central management issues), returning to UK within 5 years (temporary non-residence trap), not formally notifying HMRC of departure (leads to incorrect assessments), and not getting professional tax advice before moving (the savings often pay for the advice many times over).
Your Next Steps
Relocating to Dubai is a significant decision that requires careful planning. Here is a timeline:
6-12 months before: Get professional advice
Consult with UK and UAE tax advisors. Understand your specific situation, potential liabilities, and optimal structure.
3-6 months before: Prepare UK exit
Sell or rent out UK property. Notify clients of potential entity changes. Plan UK company structure.
1-2 months before: Set up UAE structure
Register free zone company. Apply for visa. Find accommodation. Open bank accounts.
Move date: Document everything
Keep travel records. Note date of UK home disposal. File P85 with HMRC.
Ongoing: Track UK days religiously
Use a spreadsheet or app. Count days carefully. Plan visits around tax year boundaries.
The tax savings from proper relocation planning can be substantial, often £50,000+ per year for profitable agency owners. But the complexity means professional advice is not optional. Getting it wrong can cost more than you save, and HMRC is actively targeting "stealth expats" who do not follow the rules.
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