x Abu Dhabi, UAEWednesday 26 July 2017

UK expatriate tax: case studies

The more links a person has to home country, the more likely they are to pay income tax.

Case 1: A British individual moved to the UAE two years ago and works for a company based here. He has family back home and visits them at most for 16 days a year for family holidays.

Part A of the proposed statutory test on UK tax residency would result in this individual not being treated as a UK tax resident because the individual left the UK to take up full-time work abroad (ie in the UAE) and has spent less than 20 days working in the UK during a tax year. In these circumstances the individual will be regarded conclusively as a non-UK resident.


Case 2: A British couple have lived in the UAE for more than 10 years and have children living with them in the UAE. They still own a house in the UK, which is empty and not rented out. They visit the UK for 25 days each year for family.

In these circumstances the British couple would not be regarded as UK residents under the proposed statutory test. This is because they have not been resident in the UK for the past 3 years, and have spent less than 45 days in the UK during a tax year.


Case 3: A British individual has recently relocated to the UAE to work for a UAE based employer and is required to make regular business visits to the UK totalling 90 days each year. She has most of her family living in the UK and has a house she rents out.

These circumstances are more complex and various factors need to be considered under the proposed statutory test. The first consideration is that this individual was a UK tax resident in one of the three prior tax years. Moreover, as this individual also spent 90 or more days in the UK then this individual could be treated as a tax resident if other substantive factors are fulfilled.

This could include UK resident family, but the proposed statutory test is really framed to capture circumstances where children or a spouse is resident in the UK. As the house is rented out this would not be considered as a relevant factor. However, as he/she has "substantive employment" (at least 40 days) in the UK then there are sufficient connecting factors to make this person a UK tax resident. If the UK days were fewer than 90, it is likely they would not be a UK resident under the new rules.

* Dean Rolfe, tax and legal services leader for PwC in the Middle East.