Highlights
- Wealthy UK nationals living in the UAE are heading to Ireland and France rather than returning home to avoid large tax bills.
- Those who have been non-resident for fewer than five years could face capital gains tax on assets sold while they were abroad.
- Tax advisers warn HMRC is unlikely to grant extra days under its exceptional circumstances provision this time.
Nimesh Shah, chief executive of tax advisory firm Blick Rothenberg, told The Guardian that he had received far more calls than usual from people wanting to leave the UAE.
He warned them not to expect any help from HMRC, saying: "In HMRC's mind they've chosen to go there to not pay tax in the UK. They're not going to give you a green light to spend more time here and not pay tax."
Tax risks explained
People who have lived outside the UK for fewer than five years face a double problem if they return.
They could end up paying not just income tax for this year but also capital gains tax on things they sold like businesses or investments while they were living abroad.
One wealthy business owner told The Guardian he was staying in Dublin until after 5 April when the new tax year begins.
"I'm happy to pay income tax and tax on investments next tax year, but I don't want the sale of a business that I sold years ago to fall within UK capital gains tax," he said. Another said they would spend time in France for now.
David Little, a partner at wealth management firm Evelyn Partners, said even spending a few extra days in the UK could cause serious problems, with income and investment gains from around the world potentially becoming taxable.
He warned that money made from selling assets years ago could suddenly become taxable "on their return."
During Covid-19, HMRC allowed people to spend extra days in the UK without becoming tax resident.
But tax advisers say this is unlikely to happen again this time as the UK government's travel advice for countries like Bahrain is only "all but essential travel" — not the full "no travel" warning needed to trigger this special rule.
