Tax when working in UAE

[BishopS0411]

Recently I engaged with a talent acquisition specialist to help me ‘up my game’ and break into bigger, more lucrative contract work. When we first met, he asked if I’d be interested in working overseas, to which I said yes. He’s reached out to a few of his contacts in UAE, and I’m waiting to hear about potential interviews.

Originally I thought this could be a fantastic opportunity to pay off a loan that I took to study for an MBA. And maybe bring some savings back here to buy some ISA’s, etc. But I’ve heard mixed messages about the tax implications associated with working over there.

To avoid disappointment (or worse, getting myself on the wrong side of HMRC), I’m hoping to speak to an accountant who can confirm the details.

Can anyone point me in the right direction? My current accountant was unable to offer any advice.

[northernladuk]

Not a bad idea to start getting your ducks in a row I guess but I wouldn't worry too much at this point for two reasons. One is UAE work is difficult to get and it's not the high flying rates it was of old. Over the years the rates of the few roles I've seen that I could have done aren't much better than a good UK role and then there is the complexity of the engagement. Some were via a local contact so not directly in UAE so no tax benefits. Just another UK contact with oversea client. Remember also, everyone in the world wants to work in the UAE and they will be looking east for cheap resources before west. It sounds exciting but it's very difficult to land. I wouldn't go getting all giddy about it just yet.

Second is whatever entity that gets you the work will be best placed to tell you how to get paid. They will have placed people before and have done this for years so there is a very good chance that they will give you all the details you need along with options and walk you through it. Just like any on boarding. You get an inside gig and the agent walks you through umbrellas, gives you a PSL, puts you in touch with them etc.

So with both the above considerations I wouldn't be getting too worried for the time being. Get on with looking for work, find out if it's even viable (which I doubt) and then start using their resources when you get further down the line.

[BishopS0411]

Thanks northernladuk!

I do understand that it's no longer like the good old days of before. I've heard it from a lot of people. And I've passed my concerns back to my acquisition specialist. But he's still confident that he can get me the same kind of day rate as I'm on over here. So, if I can confirm the situation with tax, hopefully, it should still be worth doing.

My concern with waiting is in letting people down. I don't want to go through the process of him 'selling' me and lining up interviews, etc. only for it to turn out to be a non-starter. I realise that's part of his job and a risk that he has agreed to take on, but I hate messing people about. Especially now that I've been in the industry for so long, and word gets around.

[BishopS0411]

I was just directed to this page on the HMRC website: https://www.gov.uk/government/public...-test-srt-rdr3

Under the third automatic overseas test, it appears as though I would be considered a non-UK resident as long as I work there for an entire 12-month tax year with less than 91 days back in the UK. Or am I reading that wrong?

[Keanu2020]

I did a year back in 2005/6. I think it was touch and go then if I was better off. While it's 'tax free' there are massive hidden costs when you live there. Things like broadband were 1/10 of the speed at 10x the cost of here (yeah, might have changed now, but you get the idea). If you go as a, tourist shopping is normally 5% to 10% against what you pay here for things like clothes. But it is the living costs that really hit (apartment, utilities, car, mobile phone, etc etc etc). My view back in 2005 was it would need to be 1.5x to 2x UK rate to make it worthwhile (i.e. come back with a big war chest). But as other have pointed out, rate has gone the other way . . .

[northernladuk]

Thanks northernladuk!And I've passed my concerns back to my acquisition specialist. But he's still confident that he can get me the same kind of day rate as I'm on over here..

Remember he's an agent, maybe with a sharper suit on, but an agent still the same. Wouldn't trust him as far as I can throw him.

[Fred Bloggs]

I was just directed to this page on the HMRC website: https://www.gov.uk/government/public...-test-srt-rdr3

Under the third automatic overseas test, it appears as though I would be considered a non-UK resident as long as I work there for an entire 12-month tax year with less than 91 days back in the UK. Or am I reading that wrong?

That's exactly the right place to look. RDR3 is reasonably well written with lots of example cases. There's going to be an example case just like you to reference. I am not going to comment further because everyone's circumstances are different. Everything you need to know is in RDR3. Read especially about years of departure and years of return where split year treatment can be applied for. Planning in advance can make all the difference. I've done it. It's not difficult really but planning and absolutely scrupulous record keeping is essential. So start now.

[Jolie]

I was just directed to this page on the HMRC website: https://www.gov.uk/government/public...-test-srt-rdr3

Under the third automatic overseas test, it appears as though I would be considered a non-UK resident as long as I work there for an entire 12-month tax year with less than 91 days back in the UK. Or am I reading that wrong?

Correct to a point, but only after being away for several years. At the beginning you have a lot less days you can return, I believe it was 16 days the last time I looked. The longer you are away, the more days you can return up to the maximum of 90 days.

But to address the tax issue, this is the crust of it:

The first year will be a split tax year, depending on what point in the year you start the gig. That's when the days test and centre of life test will be a nightmare to determine your tax status.

Each subsequent tax year, if you are in the UAE for the whole year, you are automatically non-resident and the additional ties tests don't matter.

When you return, you will again likely have a split year which will need to be worked out. In addition to the pay you receive while you are away, if you are outside the UK for more than 5 years, any other income like dividends and capital gains will also be tax-free.

So, the things you need to be keeping in mind are:

How long would you be away? Going to take a gig for a few months or up to a couple of years may not be worth it.
If longer can that work and pay be guaranteed?
Are you genuinely going to be out of the UK for the whole time? If not, then you may get tangled up in the additional ties tests.

Lastly, you will then need to factor in and consider what the others have said. If it's an average paid gig, you may be paying more for rent, travel and food than the tax you are saving.