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Writer's pictureThomas Sleep

Moving Back to the UK? Read This First!

Updated: Dec 1, 2024

Financial Considerations for Moving Back to the UK from Dubai



Relocating back to the UK after living in Dubai involves significant financial planning to ensure a smooth transition. Here's a guide to help you navigate the financial aspects of moving back.


Tax Implications


When returning to the UK after a period abroad, it's essential to address your tax status to ensure compliance with HM Revenue and Customs (HMRC). Upon resuming UK residency, you'll be subject to UK income tax on your worldwide income. To facilitate this transition, inform HMRC of your return; completing a P85 form can assist in determining your residency status for the tax year of your return.


If you were non-resident for tax purposes while in Dubai, the split-year treatment might apply in the year you return. This means that only the UK part of the tax year is subject to UK tax, potentially reducing your tax liability for that year.


Significantly, from 6 April 2025, the UK is introducing a new Foreign Income and Gains (FIG) regime. Under this system, individuals who become UK tax residents after at least 10 consecutive years of non-UK residence will benefit from 100% relief on foreign income and gains for their first four years of UK tax residence. This means that during this period, such income and gains are exempt from UK tax and can be brought into the UK without additional charges.


It's crucial to note that this 4-year FIG relief is available only if you have not been UK tax resident in any of the 10 consecutive years immediately prior to your return. Therefore, careful planning is necessary to maximise this benefit. Consulting with a tax advisor familiar with both UK and UAE tax laws is advisable to navigate these complexities effectively.


Banking and Money Transfers


Before leaving Dubai, ensure that all your banking and financial accounts are in order. Close any accounts you no longer need and settle outstanding debts. For any accounts you wish to keep, update your contact information to ensure you can manage them from the UK.


Transferring money between Dubai and the UK can incur fees and be affected by exchange rates. Use international money transfer services that offer competitive rates and lower fees compared to traditional banks. It's advisable to transfer money in larger sums to minimise fees.


Housing and Accommodation


If you own property in Dubai, decide whether to sell, rent, or keep it. Selling property can provide significant funds for your move, but consider the market conditions and any potential capital gains tax implications.


For your accommodation in the UK, research the housing market in your desired location. If you plan to buy, get pre-approved for a mortgage to understand your budget. Renting initially might provide flexibility as you settle back in.


Healthcare and Insurance


Healthcare in the UK is provided by the National Health Service (NHS). Register with a local GP as soon as you return to ensure you have access to medical services. If you had private health insurance in Dubai, you might want to explore private health insurance options in the UK for additional coverage.


Pensions and Retirement Savings


Returning to the UK after living abroad is an excellent opportunity to review your pension arrangements. Whether you’ve contributed to a local or offshore pension scheme during your time as an expat, aligning your retirement savings with UK tax rules and regulations is crucial to ensuring a smooth financial transition.


If you’ve been part of an overseas pension scheme, such as a QROPS, it’s essential to understand how this will be treated under UK tax laws. Offshore pensions often come with different rules, fees, and investment options, so now is the time to evaluate whether they remain suitable for your long-term goals. In some cases, transferring your pension to a UK scheme may be a more straightforward and tax-efficient choice, especially if you plan to settle in the UK permanently. This transfer can consolidate your pensions into one manageable pot and potentially allow you to benefit from UK tax relief on future contributions. However, pension transfers can be complex and may incur fees, so professional advice is highly recommended.


Another key area to address is tax efficiency. Your contributions to a UK-based scheme may qualify for tax relief, and understanding the current Annual Allowance and how it applies to your situation is vital. Additionally, the way your pension income is taxed once you start withdrawing funds will depend on the type of scheme you have and your residency status. Reviewing these details early can help you avoid unexpected tax liabilities later on.


If your time abroad impacted your UK State Pension entitlement, checking your National Insurance record is an important step. You may find gaps in your contributions, especially if you weren’t paying into the UK system during your time overseas. Making voluntary contributions to fill these gaps could increase the amount you receive and help you maximise your State Pension benefits in retirement.


Beyond tax and contributions, it’s worth considering how your pension investments align with your overall financial goals. As a returning expat, your investment strategy might need adjustments to reflect the UK market. Diversification is particularly important, especially if your portfolio has been heavily weighted in international investments during your time abroad.


Employment and Income


If you don't already have a job lined up in the UK, start your job search early. Update your CV and LinkedIn profile to reflect your international experience. Networking and reaching out to recruitment agencies can help you find suitable opportunities.

Understanding the UK job market and salary expectations in your industry is crucial. Consider any potential changes in your income and how they will impact your budget and financial planning.


Education and Schooling


If you have children, it's essential to research schools in your area and understand the application process and deadlines. The UK offers a mix of state and private schools, and securing a place can sometimes be competitive. If you are considering private education, factor in the tuition fees and other related costs, such as uniforms, extracurricular activities, and transport, into your financial planning.


Additionally, it’s vital to start planning for your child’s higher education early. Understand the costs associated with attending university, including tuition fees and living expenses, and assess whether your child will be eligible for a UK student loan. This will depend on factors such as their residency status and the time spent living in the UK prior to their studies. Properly accounting for these factors in your financial strategy will help you provide your children with the best possible education opportunities while managing your family’s long-term financial stability.


Final Thoughts


Moving back to the UK from Dubai requires careful financial planning and preparation. Address tax implications, manage your banking and money transfers, and plan for housing, healthcare, and education. Consulting with a financial advisor who is qualified and licensed both in Dubai and the UK can provide valuable guidance tailored to your specific circumstances. By being proactive and organised, you can ensure a smooth and financially sound transition to the UK.


Contact My Intelligent Advisor


At My Intelligent Advisor, we specialise in providing tailored financial advice that is right for you and your family. We're here to help plan for your children's education, manage investments, expat finances, and much more.


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