# UK-UAE Income tax query



## james14 (Apr 12, 2019)

Hoping someone can offer some advice on income tax - I'm seeking an experienced accountant in the meantime - and can report back, or get queries answered if helpful.

Our situation:
We are moving to Dubai in Sept/Oct this year
In the current UK tax year, wife/I have been directors of a limited company that was opened mid last year, with income only taken in during this month (June)
The income level is low and sits within our individual personal allowance
We are most likely winding the company up as we wont trade with it any longer once moved
We wont be able to drain all company funds via salaries, so will take the remainder (after last salary payments) as dividends
We own a home in the UK (on mortgage - consent to let) and intend to rent it out by Sept/Oct
Income in Dubai would be received (assume into a UAE bank account) from Oct/Nov this year
I have spoken to the accountant I use and have been advised that:
I would pass as a non-resident via the tests stated in their online SRT guidance note (I cant post the URL on this forum yet sorry - a forum rule) - theres a decision tree that makes a clear job on determining your residency status. I'd pass as non-resident on the first automatic test 'not been in the UK for 183 days' (if we leave before Oct), or the 3rd automatic overseas test 'full time work' (as the job is a permanent role with an indefinite term of employment)
As we have been shareholders in the UK in this current tax year, plus receive income in the UK via rent, we'll have to do a Self Assessment (SA) which is fully expected
Due to filing a SA, I'd have to declare my UAE income as overseas income
Due to little tax being demanded from the UK limited company income - and 'tax free' overseas income being earned in part of the tax year (I think this is termed as partial tax year), my accountant believes HMRC will demand income tax to be paid on this overseas income, regardless of whether the resident test above rules me as a non-resident, or that theres a double tax treaty between UK and UAE
Also that in order to avoid tax in the next tax year, I should not rent my house out to avoid any UK sourced income - essentially break ties where possible and remain in UAE and receive only UAE sourced income
And this is where my query starts - does anyone have experience to verify the above, or to correct it? Our situation and intentions must be identical to thousands of expats, but the advice seems confusing to me (will of course accept if it is factual and what must be done) and extreme with regards to avoiding rental income.

Any help massively appreciated. For clarity, I'll update the thread on speaking to an international/expat accountant - or verify any related questions that others have if deemed helpful.

Many thanks in advance


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## underation (Oct 25, 2018)

The treaty says:



> 1. Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.
> [..]
> 
> 3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property.


Seems pretty clear.

I’m not an accountant but it does seem unlikely from a common sense point of view that a UK taxpayer would be able to claim the whole year’s tax allowance in order to reduce UK tax on UK-source income and then move to another country and claim treaty benefits to reduce UK tax on foreign-source income for the remainder of the year.


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## underation (Oct 25, 2018)

Some information on the HMRC SITE:

https://www.gov.uk/government/publi...ssessment-helpsheet/hs302-dual-residents-2019


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## Dunedin (Aug 12, 2013)

The best approach is to first consider the 2020/21 tax year. You would expect to qualify as a non-resident under the SRT under the full-time work abroad part.

The above would entitle James14 to apply the split year rules for 2019/20, with a resident part to say Sept and a non-resident part for the latter part of the tax year.

James would not be taxed on your UAE earnings for the non-resident part of 2019/20. His rental income would be UK source income and would be taxable in the UK irrespective of residence status. He should be aware of the Non Residents Landlords Scheme. https://www.gov.uk/topic/personal-tax/non-resident-landlord-scheme

There is an anti-avoidance provision relating to close company dividends paid during a period of temporary non-residence that could apply when coming back to the UK.

There is a relevant double tax treaty, see https://www.gov.uk/topic/personal-tax/non-resident-landlord-scheme

The stated advice on avoiding rental income is misconceived.


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## james14 (Apr 12, 2019)

Thankyou for the great replies - much appreciated!

I spoke to an accountant and I can vouch for the advice kindly express above by Dunedin.


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## expatIT (4 mo ago)

Looking for some help on a similar topic to this. 

If a person is non-resident according to SRT, would any UK income not be treated as disregarded income especially for dividends etc?


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