UK Expatriates in the UAE: Tax Residence, Pensions and Inheritance Tax

Introduction

How the Statutory Residence Test, the UK-UAE tax treaty and UK pension rules apply after a move to the UAE, and why UK inheritance tax can still apply.

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Hand holding a dark blue British passport with the gold royal coat of arms on its cover

Last reviewed 24 September 2026 · Updated · 7 min read

In short

The UAE does not levy income tax on individuals, but moving there does not end your UK tax position. The Statutory Residence Test decides your UK residence each tax year, UK private and workplace pensions can usually be taken from 55, rising to 57 on 6 April 2028, and pension transfers overseas can cost 25%. UK inheritance tax can reach your worldwide assets for up to 10 years after you leave, and from 6 April 2027 it reaches most unused pension funds.

How does the UK decide if I am still tax resident?

The Statutory Residence Test (SRT) decides your UK residence for each tax year, which runs from 6 April to 5 April. Non-residents pay UK tax only on their UK income. You are UK resident if you spend 183 days or more in the UK in the tax year.

Below that, the automatic overseas tests come first, then other tests of your UK home, work and ties such as family. You are automatically non-resident if you:

  • were UK resident in any of the previous three tax years and spend fewer than 16 days in the UK
  • were UK resident in none of those years and spend fewer than 46 days in the UK
  • work full-time overseas, averaging at least 35 hours a week with no significant break, while spending fewer than 91 days in the UK and working there for more than three hours on fewer than 31 days

What happens in the tax year I leave?

The year you leave can be split into a UK part and an overseas part, so UK tax on foreign income covers only the UK part. You must be non-UK resident for the whole of the next tax year and meet one of the cases in the rules: starting full-time work overseas, being the partner of someone who does, or ceasing to have any UK home. The last case has further conditions, such as spending fewer than 16 days in the UK after your UK home goes and, within six months, becoming tax resident in your new country or making your only home there.

If you had sole UK residence in at least four of the seven tax years before you left and come back within five years, some income and gains from your time abroad, including certain pension withdrawals, can be taxed in the year you return.

Do I pay income tax in the UAE, and what does the treaty cover?

The UAE does not levy income tax on individuals. Its corporate tax does not apply to wages or personal investment income, and reaches individuals only through a business with turnover above AED 1 million in a calendar year.

Under Cabinet Decision No. 85 of 2022, you are UAE tax resident if, for example, in 12 consecutive months you spend 183 days or more there, or 90 days or more with a residence permit and a permanent UAE home, job or business. The Federal Tax Authority issues Tax Residency Certificates, which our Tax Residency Certificate guide explains.

The UK-UAE double taxation convention came into force on 25 December 2016 and has had effect since 2017. It covers UK income tax, corporation tax and capital gains tax. If both countries treat you as resident, it looks first at where you have a permanent home, then at your closer personal and economic ties. For individuals:

  • pensions paid to a UAE resident are taxable only in the UAE
  • UK government service pensions are taxable only in the UK, unless you are a UAE national living there
  • rent from UK property can still be taxed in the UK

When can I take my UK pensions from the UAE?

For UK private and workplace pensions, the normal minimum pension age is 55 and rises to 57 on 6 April 2028, with a protected lower age for some members. HMRC has published draft transitional tax rules for people aged 55 or 56 on 5 April 2028, and the final rules have not yet been made. You can usually take up to 25% of each pension tax free, up to £268,275 in total across all your pensions unless you hold a protected allowance. Treaty relief on UK pension income is claimed on HMRC form DT-Individual.

The UK State Pension can be claimed abroad, but yearly increases are paid only in the EEA, Gibraltar, Switzerland and countries with a qualifying social security agreement, and the UAE has none. Since 6 April 2026, most people can no longer pay voluntary Class 2 National Insurance for time abroad. New applicants for Class 3 need 10 continuous years of UK residence or 10 qualifying years, not counting voluntary contributions paid while abroad. People already paying Class 3 can carry on, and those paying Class 2 abroad can apply to switch to Class 3 under the old rules before 6 April 2027.

What happens if I transfer my UK pension overseas?

You can transfer a UK pension to a qualifying recognised overseas pension scheme (QROPS). Transfers to other schemes can be refused or taxed at 40% or more. Transfers to a QROPS can carry a 25% overseas transfer charge, and since 30 October 2024 schemes in the EEA and Gibraltar have had no special exemption.

A transfer is usually exempt only if you live in the country where the QROPS is based, or it is your employer's scheme. Even then, 25% applies above your overseas transfer allowance, usually £1,073,100. For a UAE resident, a transfer to a scheme based outside the UAE is therefore usually charged. HMRC's published list of recognised overseas pension schemes, updated on 15 October 2026, includes none based in the UAE. Moving country within five years of a transfer can trigger the charge later or lead to a refund.

Does UK inheritance tax still apply after I leave?

It can. Since 6 April 2025, inheritance tax has depended on long-term UK residence, not domicile, meaning UK residence in at least 10 of the previous 20 tax years, with a split year counting as a full year. Long-term residents are taxed on worldwide assets, and others only on UK assets, such as UK property, including UK homes held through an overseas company. Tax is charged at 40% above a nil-rate band of £325,000, which is fixed until 5 April 2031.

This status lasts for 3 tax years after you leave if you lived in the UK for 10 to 13 years, rising by a year for each extra year, up to 10 years after 20 years of residence. Transitional rules apply if you were not UK resident in the 2025 to 2026 tax year and were not UK domiciled under common law on 30 October 2024. If you were UK domiciled on that date, the new test applies to you in full, even if you left the UK before April 2025.

From 6 April 2027, most unused pension funds and pension death benefits will count towards the estate. Death-in-service benefits and dependants' scheme pensions are excluded. Personal representatives will report and pay any tax due, and beneficiaries can also become liable for tax on the pension funds they receive.

For long-term UK residents, the change also covers pension schemes set up outside the UK, such as a QROPS. HMRC's technical note says funds in UK-established schemes stay in scope even for people who are not long-term UK residents, and HMRC plans further technical notes on people in that position.

The UK has no inheritance tax treaty with the UAE. Our wills and inheritance guide covers how UAE assets pass on death.

Frequently asked questions

Do I need to tell HMRC when I move to the UAE?

Yes, if you are leaving to live abroad permanently or to work full-time abroad for at least a full tax year. Use form P85, or the residence section (SA109) of a Self Assessment return.

Will my UK pension be taxed in the UK while I live in the UAE?

Usually not, but you need to claim the relief. Under the treaty, most pensions paid to a UAE resident are taxable only in the UAE. You claim on HMRC form DT-Individual, either to stop UK tax being taken off or to get back tax already paid. UK government service pensions, such as civil service pensions, stay taxable in the UK.

Can I still transfer to a QROPS in the EEA free of the charge?

Not automatically. Since 30 October 2024, EEA and Gibraltar schemes follow the same rules as schemes elsewhere, so a UAE resident would usually pay the 25% charge.

Will my UK pension face inheritance tax if I die in the UAE?

It can, for deaths on or after 6 April 2027. If you are a long-term UK resident, most unused pension funds will count towards your estate, including those in schemes set up outside the UK, such as a QROPS. If you are not, HMRC says funds in UK-established schemes still count, and it plans further guidance on this before April 2027.

How Indigo Group can help

Indigo Group can help with wealth management, including retirement planning, for UK expatriates in the UAE through our Wealth Management team, and with wills, trusts and estate planning through our Trust and Estate Planning team. For an overview of how we work with expatriates, see financial advice for expats in Dubai. Indigo Group's regulated entity, Indigo Financial Analysis and Consultancy LLC, is licensed by the UAE Capital Market Authority (CMA), licence no. 706042.

Read more about our wealth management and retirement planning for expatriates in Dubai and our estate planning in Dubai.

To talk this through, book a consultation or message us on WhatsApp.

Written by

Colin Lynam

Managing Director

Colin is an experienced wealth manager with extensive knowledge of the GCC.

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Last reviewed 24 September 2026. This article is for general information only and does not constitute financial, legal or tax advice. Rules change, so please speak to a qualified adviser about your circumstances.

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