Adapting for growth:
Why UK businesses are looking globally

Watch the recording below:

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“From a pure tax perspective, the UAE is very hard to beat globally.”

“If HMRC conclude that management and control are effectively in the UK, they are likely to treat the UAE company as UK tax resident for corporation tax purposes.” — Max Raynor

Thank you to everyone who joined us for the webinar. For those who couldn’t join us live, we’ve pulled together a clear and engaging summary of the discussion — including the shifts shaping the UK business landscape and why the UAE is attracting so much interest.

Our Managing Director, Max Raynor, walked through the current UK tax landscape, why more founders are beginning to look overseas and what setting up a business in the UAE involves from both a tax and operational perspective. Here’s an overview of what he covered during the session:

Key takeaways from the UK Budget

There was a lot of noise before the Budget, with speculation about everything from income tax rises to a potential exit tax. The reality of the Budget was relatively muted. It was not especially dramatic in either direction, but the changes do contribute to a growing overall tax burden.

Dividend tax and corporate tax

There was a 2% increase in dividend tax, taking the rate to nearly 40%. This comes on top of the 25% corporation tax already paid on company profits before dividends are taken.

As a result, the UK is moving towards being one of the higher tax regimes in Europe for business owners extracting profits.

Income tax thresholds (“stealth taxes”)

The personal allowance threshold has been frozen until 2031. It was originally due to be frozen until 2028, but this has now been extended.

These frozen thresholds operate as “stealth taxes”, as more people are pulled into higher effective tax rates over time without headline rate changes.

Pension salary sacrifice cap

For many business owners, the changes to pension salary sacrifice are significant. Previously, there was a strong tax advantage in contributing to pensions. This has now been capped at £2,000, which limits a key planning tool for owner-managers.

Overall impact on founders

Individually, none of these measures is catastrophic. However, they add to a sense that the UK’s total tax burden is rising.

Forecasts suggest the overall tax burden could reach around 38% of GDP by 2030, putting the UK at the top end of European tax regimes.

At the same time, there was very little in the Budget that could be seen as clearly pro-growth or particularly supportive of business owners.

Migration data has also been revised, with the estimate of people leaving the UK in the last year increased from 75,000 to 250,000. No meaningful measures were introduced to address this trend or to provide a strong incentive for founders considering leaving to remain in the UK.

Why the UAE is so attractive from a tax perspective

Looking at Dubai and the wider UAE, the tax position is very different and in many respects, highly attractive.

Personal tax

There is 0% personal tax in the UAE. This includes:

Income tax
Capital gains tax
Tax on dividends

For individuals who are tax residents in the UAE, this can make a substantial difference to their overall personal tax position.

Corporate tax

From a corporate perspective:

No corporation tax is payable on profits up to 375,000 dirhams (around £80,000)
Profits above that threshold are taxed at 9%

Depending on the type of activity carried out and how the structure is set up, it can still be possible in some cases to maintain an effective 0% rate on profits. From a pure tax perspective, the UAE is very hard to beat globally.

UAE support for Innovation and R&D

Beyond the headline tax rates, one of the most exciting developments is the UAE government’s support for innovation. They are actively encouraging technology and engineering businesses to come to the UAE and build real operations there.

Similar to the UK’s R&D tax relief (despite its recent challenges), the UAE is introducing a scheme under which up to 50% of qualifying research and development spend can be returned as a cash benefit. This is due to come into effect next year.

We are already seeing companies that:

Previously had development teams in the UK
Are now considering relocating or expanding those teams into the UAE
Are attracted by both the financial incentives and the access to talent

The UAE’s location gives excellent access to a large regional talent pool, including highly skilled developers from India and other nearby markets. When you combine more cost-effective hiring with a potential 50% R&D cash benefit, the overall package becomes very compelling.

Why doesn’t everyone just set up in Dubai?

A common question is:

“If the UAE is so attractive, why doesn’t everybody just set up a company there?”

The key issue is economic substance.

What is economic substance?

Economic substance is the requirement to have a genuinely active operation in the UAE, typically including:

Real decision-making taking place in the UAE
Appropriate personnel on the ground (directors and/or employees)
A local bank account and evidence of real trading activity

Previously, economic substance reporting was an obligation in the UAE itself, but those reporting requirements have been relaxed.

However, from a UK tax perspective, economic substance is still critical. HMRC will look at where management and control actually sit.

UK tax view: Management and control

If you are living and working in the UK but incorporate a company in the UAE, with the intention that revenues flow into that UAE entity, HMRC will look at:

Where you live
Where you work
Where key decisions are made

If they conclude that management and control are effectively in the UK, they are likely to treat the UAE company as UK tax resident for corporation tax purposes.

In that case, the expected tax advantage of setting up in the UAE would not materialise, as the company would be taxed in the UK.

This is why it is so important to get advice on:

Economic substance
Effective place of management and control

so that, if HMRC ever review the structure, there is a clear and defensible position.

Common ways businesses expand into the UAE

Most clients considering the UAE tend to fall into one of two patterns:

Living and working in the UAE or
Living in the UK while operating a UAE office

Both can work, as long as economic substance is achieved in an appropriate way.

Living and working in the UAE

If you move to the UAE and carry out your decision-making there, economic substance is much easier to demonstrate. The business is clearly based in Dubai or elsewhere in the UAE. In that scenario, you may benefit from:

0% corporation tax up to 375,000 dirhams (and in some structures, potentially beyond that), and
0% personal tax on: Income, Capital gains (including on investment properties) and gains on the sale of your own business

Tax residence considerations

To be considered tax resident in the UAE, you need to spend more than 90 days there.

At the same time, the UK’s focus will be on how many days you spend back in the UK and how many ties you maintain. This will determine whether you remain UK tax resident.

If you exceed your permitted UK days – even by a small margin – you may be treated as UK tax resident for the entire year and taxed accordingly.

Some individuals may be able to spend around 90 days in the UK, others less (for example, 45 days) and some more, depending on their ties. This is a highly fact-specific area and it is essential to get tailored advice.

Living in the UK with a UAE company

It is also possible to live in the UK and operate a UAE company, provided the structure is put together correctly and there is genuine substance in the UAE. This often arises where a UK business is expanding into the UAE.

Common features include:

Hiring a local team member in the UAE (business development or operations)
Establishing a real office presence
Carrying out activity on the ground

If the substance is in place, the UAE company can benefit from the local corporate tax regime (including the 0% rate up to 375,000 dirhams).

However, if you personally remain UK tax resident, your personal income will still be subject to UK income tax.

The advantage in this scenario is that the UAE company’s profits may be taxed more lightly than an equivalent UK company and dividends or distributions can be structured more efficiently than they might be from a purely UK-based entity.

Types of businesses moving to the UAE

We are seeing a diverse range of businesses moving to or expanding into the UAE.

Technology businesses

Some technology companies are relocating their entire technical function to the UAE. A common model is:

Holding the core technology and IP in the UAE entity
Licensing that IP to overseas group companies (including UK entities)

Licensing arrangements can provide a legitimate route to move revenues into the UAE in return for the right to use that IP.

Consultancy businesses and mobile founders

Consultancy businesses are also a good fit. An individual might:

Establish a company in the UAE
Spend the required number of days there to maintain residence
Then work flexibly from other countries, keeping an eye on local day-count rules

The UAE structure can provide flexibility, provided that the individual manages their time and ties in each jurisdiction carefully.

Headquartering and management services

Another route is to set up a headquarters or management services company in the UAE. This could act as:

A holding company or
A service company charging management or service fees to UK and other group companies

This reduces UK taxable profits and increases profits taxed in the UAE, which can improve overall tax efficiency when done correctly and supported by real activity.

How and where to set up a company in the UAE

The incorporation process in the UAE is more complex than in the UK.

In the UK, you can incorporate a company quickly and inexpensively via Companies House or a formations service such as Rise Formations, often within 24 hours for a relatively low fee.

In the UAE, there are more decisions to make upfront.

Free Zone vs Mainland

The first key decision is whether to set up as a Free Zone company or a Mainland company. This depends primarily on where and how you will trade:

If your work is largely outside the UAE (for example, UK clients or international contracts), a Free Zone is often appropriate.
If you want a physical presence in Dubai outside a free zone – such as a shop, restaurant or other premises – or you want to contract directly with UAE government bodies or mainland entities, you will need a Mainland licence.

Why Free Zones remain popular?

Free Zones historically allowed foreign owners to retain 100% ownership, at a time when Mainland companies often required a local sponsor. Rules have evolved, but free zones still offer strong benefits and remain a common choice.

Each free zone specialises in particular types of activity. It is therefore important to select a free zone that matches your business:

For example, financial services firms may look at DIFC
Marketing or other service businesses may be better suited to a different free zone

Specialist advice is important at this stage to ensure the business is correctly licensed and approved.

Cost differences

Mainland licences are typically more expensive than free zone licences. As a general guide, they can cost a few thousand pounds more per year.

Example: Free Zone setup timeline and costs

In a Free Zone the process and costs might look like this:

Processing time: around 5–10 working days
Trade licence: approximately 16,000 dirhams (just over £3,000), renewed annually

If you are planning to set up in the UAE, it is important to factor in that recurring annual cost from the outset.

If you also obtain a visa (which we usually recommend for at least one founder or director):

A typical visa cost is around 5,000 dirhams

This makes the total setup and annual running costs in the region of:

21,000 dirhams (around £4,000) per year, including licence and one visa

Once the business licence has been issued, the visa application is submitted and linked to the company. As long as the company maintains an active licence, the visa can continue to be renewed.

Visas are usually issued for one or two years and renewed in line with the business licence.

Visa process, Medical checks and Emirates ID

To obtain a visa and Emirates ID, you must complete:

A medical check (blood tests and chest X-ray), and
Biometrics (fingerprinting)

Once this is done and your Emirates ID is issued, you can:

Open a local bank account
If you are relocating, enter into a tenancy agreement and obtain Ejari

An Emirates ID is effectively essential for doing business in the UAE. Even if you are not planning a full relocation, we generally recommend obtaining one because:

You cannot open a standard business bank account without it
Without a local bank account, it is extremely difficult to demonstrate economic substance

While some people may rely on trusted local contacts to operate bank accounts on their behalf, in most cases, founders prefer to keep direct control.

How Rise Accounting can help

Rise Accounting is well placed to support businesses in this area, with offices in both London and the UAE. We support clients through:

Initial structuring and feasibility – assessing whether a UAE setup makes sense for your situation
Selecting the right free zone or mainland setup – based on your activity and plans
Preparing and submitting incorporation applications
Co-ordinating visa applications for founders and where appropriate, family members

Post-incorporation and ongoing support

After incorporation, you will still need:

Banking relationships
Insurance and other local partners
Potential support with housing or relocation

We work with a trusted network of partners to help clients get established efficiently and confidently. On an ongoing basis, UAE businesses also have:

Accounting and bookkeeping obligations
Tax registration and filing deadlines

For example, companies must register for corporate tax within 90 days of meeting the relevant conditions. Missing this deadline can lead to a penalty of 10,000 dirhams (around £2,000).

We help ensure that clients understand these obligations and avoid unnecessary fines or compliance issues.