"Tax-free Dubai" – it's the dream that drives thousands of UK families to consider relocating. But how much of it is reality, and how much is a dangerous myth?
I sat down with Ulas Sadak from deVere Group – a financial planning expert with 28 years of experience, including 14 years here in the UAE – to get the real answers. What he shared might surprise you.
Why Ulas Moved to Dubai
Ulas's story sounds familiar to many of us:
"I remember looking at my wage slip one month and thinking, 'That's 45% tax.' At 33, I asked myself: can I really pay HMRC 45% for the rest of my life? So I bit the bullet. I didn't want a trial. I said: I'm moving, let's make it happen."
He's been here 14 years. But the Dubai he moved to is very different from the Dubai of today.
How Dubai Has Changed (And Why It Matters)
This was eye-opening. Here's what Ulas sees happening:
14 Years Ago
- Companies headhunted talent globally
- Packages included high salaries
- 100% school fees paid (multiple children)
- Excellent health insurance
- 2-3 flights home per year
Today
- It's an employer's market
- Hundreds of CVs for every role
- Companies don't need to offer generous packages
- Cost of living has risen significantly
- Same skilled labour, much lower benefits
"I think it will be very difficult for people coming here today to achieve financially what people were achieving 10, 15, 20 years ago. The salaries will not be the same and the cost of living has risen significantly."
The "Holiday Mode" Trap
This one hit home. Ulas called it the biggest mistake he sees:
"Once you move out here, for most people, it's a holiday in the early seasons. You get caught up in the brunches every weekend. The sun's always shining. You almost forget that real important reason – probably the main driver – that you moved in the first place."
I felt this personally. Even being pragmatic with a spreadsheet, you land here and holiday mode lasts way longer than expected. Then you look back and think: how have I spent so much money?
The Big Tax Myth: Busted
Here's where it gets serious. If you're a UK business owner thinking "I'll move to Dubai and save all my tax" – read this carefully.
The Reality for UK Business Owners
UK-derived income remains taxable in the UK – regardless of where you live.
If you have a UK business generating revenue from UK clients, or invoicing from a UK entity (even for international clients), that's UK-derived income. It should be disclosed to HMRC.
"Most people don't do that. I'm happy to have a transparent conversation – most people probably wouldn't get caught. But the reality is: it's illegal. It's tax evasion."
What About Setting Up a UAE Entity?
Even if you invoice from a UAE company, if the invoice is being settled by a UK resident through a UK business structure, there's grey area. In theory, you should still be disclosing to HMRC.
What You CAN Do
- Defer dividends – Let the balance accrue rather than taking income
- Use personal allowances – £12,570 tax-free per person in UK
- Deduct operational costs – Including accountant fees
- Set up a non-UK arm – For genuinely non-UK business
When Should You Talk to a Financial Planner?
I asked Ulas when someone should engage a professional. His answer: before you move.
"The right time would actually be during the process of leaving your home country. A couple of months in advance. 'Hey, we're moving to the UAE in two or three months. This is my setup. These are my reasons.' Have that conversation early."
Why? Because if you wait until you're here, you're already in holiday mode. And by the time reality hits, you might have wasted years.
Questions to Ask Yourself Before Moving
Ulas was clear: be honest with yourself first.
- Why are you really moving? (Be truthful about the main driver)
- Where do you see yourself in 5-10 years?
- What do you actually want to achieve?
- What steps have you taken so far? If none – why not?
"Why do you have a membership for two golf clubs, but you've not insured yourself to make sure your wife and children are protected?"
Pensions and Retirement: How It Works Here
This was news to me. There's no state pension system in the UAE.
End of Service Benefits (Gratuity)
Most employers provide a "golden handshake" when you leave:
- Years 1-5: 1 month salary per year
- Years 5-10: 1.5-2 months per year
- 10+ years: Some companies offer 2 months per year
Important: This isn't a pension. It's paid when you leave the company, not when you retire. And many people just spend it.
DIFC Pension Schemes
Some companies in the Dubai International Financial Centre now offer pension-style schemes with employer matching. But these are relatively new.
For Business Owners
Ulas's framework is simple: Pay yourself first.
"Take a similar amount to what you would have been paying in tax back home – where you had no choice. Do the same thing here. Pay yourself first. Take a portion of that money, typically around 15%, save and invest it. Put that aside. If you spend all the rest, it doesn't matter. You're being strict every single month."
What About Property Back in the UK?
Many families keep their UK home when moving. Here's Ulas's take:
"It's an asset. Try to look at it as bricks and mortar and nothing else whilst you're not living there. If you're leaving an empty property that you might use for 4 weeks a year – as a financial adviser, that's crazy. Rent it out."
The NRL1 Form
This was new to me: the Non-Resident Landlord (NRL1) form.
If you successfully apply to HMRC and prove you're not UK tax resident, you can receive rental income from UK property tax-free.
Without it, your letting agent must withhold 20% tax on your rental income.
Capital Gains Tip
If you sell a UK property while non-resident, the capital gains liability is significantly lower than if you sold while living in the UK.
How Do You Prove You're Non-Resident?
The Statutory Residence Test (SRT) determines your tax status. Key factors:
- Do you spend more than 183 days outside the UK?
- Do you have a family home available in the UK?
- Do you work in the UK (even answering emails)?
- Do you maintain gym memberships, golf clubs, subscriptions?
The simplest rule: If you live outside the UK for over 6 months each year, you're generally considered non-tax resident for non-UK income.
But there are caveats – especially around split tax years and UK ties. This is where professional advice is essential.
Big Expenses to Budget For
What catches families off guard:
| Expense | Typical Cost |
|---|---|
| Property deposit | 5% of annual rent |
| Broker's fee | 5% of annual rent |
| Security deposit | Additional (varies) |
| School fees | May need to pay upfront before employer reimburses |
| Furniture | UAE properties are bigger – UK furniture often doesn't fit |
| Car | Rental or purchase plus insurance |
| "Holiday mode" | Brunches, experiences, exploration (budget for this!) |
Pro tip: We moved at the start of summer holidays. Gave ourselves 6 weeks to explore and get it out of our system, then settled into real life.
Will Dubai Introduce Income Tax?
I had to ask. Here's Ulas's prediction:
"I've spoken to clients at a couple of the Big Four accountancy firms. They've both said they're aware of conversations with the government around designing an income tax model. I think it will happen. You can't sustain this level of growth without it."
His guess:
- A personal allowance (tax-free threshold)
- Low initial rates (5-10%)
- Tiered system similar to UK
When? Nobody knows. But it's worth planning for.
The Structures That Protect You
Sean (our producer) jumped in with a great question about tax-advantaged structures for UK expats.
The key insight: If you set up the right investment vehicle while living in the UAE (typically domiciled in Isle of Man, Guernsey, or Jersey), and you later return to the UK:
- You can draw on those funds with reduced tax liability
- You can pass funds to family members without forced disposal
- The structure remains tax-efficient even after repatriation
DIY investing platforms don't offer these benefits. This is where professional advice pays for itself.
The Reality Check
Ulas has seen people with "crazy salaries" leave Dubai in terrible financial shape because they got caught up in the lifestyle.
"If you looked at the way they were living, you'd say 'wow, what a great life.' But behind the scenes... It's amplified here because of social media, the life everyone wants to portray."
My advice? Find your tribe. I went to the rugby club, hung out with people who've been here 15-20 years. People living normal, sustainable lives. That grounded me fast.
Key Takeaways
| Myth | Reality |
|---|---|
| "Dubai is completely tax-free" | UK-derived income remains taxable |
| "I'll save everything I earn" | Cost of living is high; holiday mode is real |
| "Packages are generous" | It's now an employer's market |
| "I'll figure it out when I get there" | Plan before you move |
| "Financial planning is for rich people" | Everyone should plan, regardless of wealth |
Connect with Ulas
Ulas was clear: even if there's no immediate business, he's happy to help point people in the right direction.
LinkedIn: Ulas Sadak
Whether it's a general question about living here, tax implications, or financial planning – reach out. Initial conversations are typically free.
Planning Your Move?
If you're a family thinking about relocating to Dubai, get the full picture before you commit:
- Take my neighbourhood quiz – Find the right area for your family
- Read: Dubai After 90 Days – Our honest cost breakdown
- Explore the Relocation Package – If you want hands-on help navigating the process
The dream of Dubai is real – but it takes planning to make it work. Don't let the myths trip you up.