Buying property in Dubai from the UK

The short version

If you live in the UK, a property in Dubai is taxed in the UK — much like a property in the UK.

• Rent from Dubai is taxed in the UK as the profit of a separate overseas property business — at your normal rates for 2026/27, and at new property rates from April 2027. There is a tax treaty, but the UAE does not tax an individual’s rent from an ordinary tenancy, so there is nothing to credit.
• A loss on the Dubai flat can only be carried forward against later profits from your lettings abroad. It cannot reduce the tax on your salary or on rent from the UK.
• Selling is a UK capital gains event, worked out in pounds. The exchange rate alone can create a taxable gain, even if the price in dirhams did not change.
• If you have been UK resident for at least 10 of the last 20 tax years, the flat is within UK inheritance tax. Who inherits it is decided under UAE rules; if you are not Muslim, a will registered in Dubai lets you decide.
• A bank transfer to Dubai needs no permission: the UK has no exchange controls. The rent and any gain go on your Self Assessment return.
• You may not need to fly in. For off-plan, the developer registers the purchase; ask whether you can sign remotely. For a finished property, someone can sign for you on a UK power of attorney: a notary, an apostille from the UK’s Foreign Office, the UAE’s digital attestation and an Arabic translation — and Dubai checks its wording and age.
• Your price is in dirhams and your money in pounds. In every three-year stretch since 2015, the pound’s highest month-end rate was at least 13% above its lowest.

Figures are for the 2026/27 tax year unless stated otherwise. Any Budget can change them.

“Tax-free” is not true for you

There is a tax treaty between the UK and the UAE, and it does not make your rent tax-free. The treaty — formally, the convention of 2016, in force since 25 December 2016 — lets the UAE tax income and gains from property in the UAE. It obliges the UK to allow UAE tax on that income or gain as a credit against the UK tax on it.

The UAE “does not levy income tax on individuals”. Its corporate tax leaves out an individual’s income from selling, leasing or renting out property in the UAE, as long as this is not done, and does not have to be done, under a licence. Using a letting agent does not change that. Letting a holiday home under a permit in your own name does. That counts as a licensed business, and UAE corporate tax can apply once your business turnover in the UAE exceeds AED 1 million in a calendar year. With an ordinary tenancy, there is no UAE tax to credit, and you pay the full UK tax on your rental profit.

Every UK resident is taxed on income and gains from anywhere in the world, whether or not the money comes to the UK. Since 6 April 2025 that also applies to people whose permanent home (“domicile”) is abroad: the remittance basis has ended. Rent you leave in a UAE account is taxable all the same. The main exception is for people who become UK resident after 10 tax years in a row of not being UK resident. For their first four tax years of UK residence, they can claim relief on foreign income and gains (the 4-year FIG regime). For each year they claim, they lose their personal allowance and capital gains tax allowance, relief for losses abroad, and the mortgage-interest reduction on their lettings abroad.

For you, a flat in Dubai is taxed much like a flat in Doncaster. “Tax-free” is true in Dubai and wrong in the UK.

Some cases are different in both countries: a property held through a company, a holiday home let under your own permit, and commercial property. Rent from an office or a shop also carries UAE VAT at 5%. Your tenant pays it, and it is not a tax on your income, but you may have to register for VAT in the UAE. Take these cases to your tax adviser before you buy, not after.

How the rent is taxed

Rent from abroad forms its own business for UK tax: an “overseas property business”. It is kept separate from any property you let in the UK. Its taxable profit is the rent less allowable costs, such as the service charge, letting agent’s fees, repairs (not improvements) and insurance.

Amounts in dirhams are converted into pounds. HMRC’s general rule for foreign income is the exchange rate on the day the income arose. For business accounts — and rental profit is worked out the same way — it also accepts other reliable rates, such as your bank’s or HMRC’s monthly rates. Choose one method with your adviser and keep to it.

For a home you let, mortgage interest is not deducted. Instead, your tax is reduced by 20% of the interest and other finance costs — the basic rate for 2026/27 — even if you pay tax at 40% or 45%. In a year without a rental profit, you get no reduction; the unused amount is carried forward to later years. This applies to a home abroad as much as to one in the UK. For commercial property, such as an office or a shop, the restriction does not apply: the interest is deducted from the rent like other costs.

The £1,000 property allowance is one allowance for your UK and overseas property income together. Up to £1,000 of property income a year is tax-free. Above that, you can deduct £1,000 instead of your actual costs. Either way, you then cannot claim the mortgage-interest reduction.

From April 2027, rent gets its own rates. The Finance Act 2026 sets separate income tax rates for property income, which includes the profit of an overseas property business. For 2027/28 they are 22%, 42% and 47%, and the mortgage-interest reduction rises to 22%. These rates apply in England and Northern Ireland. In Wales, the Senedd sets part of each rate, so Welsh taxpayers’ rates can differ. Scottish taxpayers pay Scottish rates.

Losses stay with your lettings abroad

A loss on your lettings abroad is carried forward and set only against later profits from your lettings abroad. It cannot reduce the tax on your salary, and it cannot be set against rent from a property in the UK. When your letting abroad ends — usually when you sell your last property abroad or start to use it for something else — unused losses are lost.

There is one narrow exception. If part of a loss comes from capital allowances — tax relief on equipment you buy for the letting — you can claim to set that part against your other income in the same or the next tax year. With a flat this rarely helps: furniture, appliances and other equipment for use in a home do not qualify for capital allowances. With commercial property it can; ask your adviser.

This bites hardest in the first year after handover, when the unit may stand empty while the service charge runs. None of that lowers the tax on your salary that year.

What you report in the UK

A bank transfer to Dubai needs no permission. The UK has no exchange controls. Cash is different: if you carry £10,000 or more between Great Britain and a country outside the UK, you must declare it to UK customs. Your bank, the receiving UAE bank and your broker will still want to know where the money came from — see Proving where your money came from.

The rent and any gain go on your tax return. If you do not already file one, tell HMRC by 5 October after the tax year in which the rent started — for rent from 2026/27, by 5 October 2027. Rent from abroad goes on the foreign pages of the return (SA106). File the return online and pay the tax by 31 January after the tax year — for 2026/27, by 31 January 2028.

Making Tax Digital for Income Tax means keeping digital records and sending HMRC an update every quarter. It depends on your “qualifying income”: your income from self-employment and from UK and foreign property, before costs. Your salary and pensions do not count. If it was over £50,000 in 2024/25, you should have been using it since 6 April 2026. Over £30,000 in 2025/26 brings you in from 6 April 2027, and over £20,000 in 2026/27 from 6 April 2028 — so Dubai rent of more than £20,000 in 2026/27 is enough on its own.

Selling: capital gains tax, in pounds

UK residents pay capital gains tax on gains wherever the asset is. For 2026/27 the rates are 18% on gains within your unused basic-rate band and 24% above it, after a tax-free allowance of £3,000 a year. Budgets can change these rates, sometimes from Budget day itself, as in October 2024. The UAE does not tax an individual’s gain on selling property, so again there is nothing to credit.

Your gain is worked out in pounds, not dirhams. HMRC converts what you paid into pounds at the rate on the day you bought, and what you receive at the rate on the day you sold. It does not accept working out the gain in dirhams first and converting the result. So the exchange rate alone can create a gain or a loss. The pound moves against the dirham as it moves against the dollar; see The currency.

Costs count. The costs of buying and selling — such as the Dubai Land Department’s registration fee and agents’ and lawyers’ fees — are added to what you paid or taken off what you receive, and so reduce the gain.

Off-plan instalments. If you pay for an off-plan unit in instalments over several years, HMRC’s guidance does not say which date’s rate applies to each payment. Keep a record of the rate on every payment date and ask your adviser.

Reporting. The 60-day return is only for property in the UK. If you file Self Assessment returns, a gain on a property abroad goes on your return, filed online by 31 January after the end of the tax year. If you do not, you can report it through HMRC’s real-time Capital Gains Tax service by 31 December after the end of the tax year. Either way, you pay by 31 January — for a sale in 2026/27, by 31 January 2028.

Selling before handover. For capital gains, a sale that goes through is usually dated to the day the contract is made, not the day it completes. If you sell your off-plan contract before the building is finished, what you sell is your contractual right to the unit, which is an asset for capital gains tax.

If you cannot complete and the developer keeps what you paid, you lose the money. A UK tribunal has held, in a case about an off-plan property in London, that there is then no disposal, so you also get no capital loss to set against your gains. Whether the same applies to a Dubai contract, or to a cancellation with a part refund, is a question for your adviser.

Buying in order to sell quickly can also be treated as trading, with the profit taxed as income, not as a gain. Doing it more than once makes that more likely, but a single deal can count.

Your own home abroad. Relief for your main home can apply to a home outside the UK. But there is a test for each tax year in which neither you nor your spouse or civil partner is resident in the UAE. For such a year, the flat counts as your home only if you spend at least 90 days in it, or in other homes in the UAE that you or your spouse or civil partner own. A day counts if you are there at midnight, and your spouse’s or civil partner’s days count too; in the year you buy or sell, the 90 days are reduced in proportion. If you also have a home in the UK, you choose which one is your main home by telling HMRC within two years of first having both.

Inheritance: UK tax, Dubai rules

For inheritance tax, your residence counts, not where the flat is. Since 6 April 2025, whether UK inheritance tax reaches your assets outside the UK depends on long-term UK residence, not on domicile. If you have been UK resident for at least 10 of the previous 20 tax years, your assets outside the UK — a flat in Dubai included — are within it. The standard rate is 40% on the part of an estate above the £325,000 threshold, which is frozen until April 2031. There is no inheritance tax treaty between the UK and the UAE.

Who inherits the flat is decided under UAE rules. UAE law applies to a foreigner’s will about property in the UAE. Without a will, UAE rules point in different directions for an owner who lives abroad. One points to the law of your nationality, another to the law in force in Dubai for property in the emirate. The UAE’s law for non-Muslim foreigners living in the UAE sets a fixed split: half of the estate to the spouse, half to the children in equal shares. No official text we found settles which applies.

A will registered in Dubai settles it. If you are not and have never been Muslim, the courts of the Dubai International Financial Centre (DIFC) register wills for people with assets in the UAE, including people who do not live there. You can attend the appointment online. A will covering up to five properties costs AED 7,500. Dubai Courts keep a register of non-Muslim wills too. Make sure your UK will and your Dubai will do not contradict each other.

Moving to Dubai does not end UK tax automatically

UK tax residence ends only under the UK’s own test. The statutory residence test decides, one tax year at a time. You are automatically non-resident if you spend fewer than 16 days in the UK in the tax year, or fewer than 46 if you were not UK resident in any of the three previous tax years. You are also automatically non-resident if you work full-time abroad — on average at least 35 hours a week — spend fewer than 91 days in the UK, and work more than three hours in the UK on fewer than 31 days. If none of these applies, you are UK resident if you spend 183 days or more in the UK or meet another automatic UK test. Otherwise it depends on your days in the UK and your ties to it, such as family, a home or work there. In the year you leave, the tax year can be split into a UK part and an overseas part.

Two things outlast the move:

• Gains. This applies if you were UK resident in at least four of the seven tax years before the tax year you left, and you become UK resident again within five years. Then a gain you make while abroad on something you owned before you left, such as the Dubai flat, is taxed as if made in the year you return.
• Inheritance tax. If you are a long-term UK resident when you leave, you stay one for three to ten tax years afterwards, depending on how many of the last 20 tax years you were UK resident. Until then, the Dubai flat stays within UK inheritance tax.

Income from the UK, such as rent from a UK flat, stays taxable in the UK after you leave. If you are planning a move, talk to your adviser before you go.

Buying without flying in

Off-plan. The developer registers your purchase with the Land Department through its developer portal, Oqood. For a non-resident buyer, the Land Department lists a copy of the sale and purchase contract and a copy of a valid passport, and the sale must be registered within 90 days of signing. The Land Department’s description does not ask you to be there in person. Whether you can sign the contract remotely is the developer’s practice, not a published rule — ask before you reserve.

A finished property is transferred at a registration trustee office licensed by the Land Department, between the parties “or their legally authorized representatives”. If you are not there, someone signs for you on a power of attorney.

A UK power of attorney goes through four steps before you can use it in Dubai. The UAE is not a party to the Apostille Convention, so an apostille alone is not enough:

Since July 2025, Dubai also checks the paper, the wording and the age. The Land Department’s Circular No. 29/R/2025 is known from Dubai law firms’ summaries. One of them reports that the Land Department wants to see the original paper document, not an uncertified electronic or scanned copy, and accepts a power of attorney issued abroad only if it names the transaction explicitly — for a purchase, wording such as “purchase for oneself with explicit specification of the ownership share”. General wording like “full authority to manage property” can be rejected. Whether the Land Department accepts the London embassy’s digital attestation together with the original is not settled. Ask the developer or the trustee office before you start.

How old it may be is less settled. The law firms read the circular as two years for any transaction. The Land Department’s own FAQ gives two years for selling, mortgaging or gifting a property and five years for buying one, counted from notarisation. Assume two years: sign it close to when it will be used, not when you reserve, and have the wording checked in Dubai before you sign it in the UK.

If you later sell on a power of attorney, the same law-firm summaries say the circular also controls the money. The sale price is paid by manager’s cheque — a cheque issued by the bank itself, like a UK banker’s draft — in your name as the owner on the title deed. A cheque to your representative is possible only on conditions, for example a receipt stating that it was received on your behalf. One firm reports that, in practice, cheques are again made out to the representative where both the sale contract and the power of attorney say so. So have both say who may receive the money. See Proving where your money came from.

The currency: your price is in dirhams, your money in pounds

The dirham is pegged to the US dollar at 3.6725 (Central Bank of the UAE). The rate that moves your price is the pound against the dollar.

Since January 2015, the month-end rate has ranged from 4.099 dirhams to the pound (September 2022) to 5.760 (June 2015). For a property priced at AED 1.5 million, that is the difference between £365,943 and £260,417 — £105,526 for the same flat.

An off-plan payment plan runs for years. Over every 36-month stretch since 2015, the highest month-end rate was at least 13% above the lowest — typically about 19%, and up to 28%. Within 2025 alone, the same AED 1.5 million cost £329,598 at the end of January (4.551 dirhams to the pound) and £297,442 at the end of June (5.043).

You can fix a rate in advance with a forward contract through your bank; it binds you to the amount and the date. Or you convert each instalment when it falls due and accept the swing. Either way, plan your instalments in pounds with room for that swing, not at today’s rate. The exchange rate also counts when you work out your capital gain.

Questions for your tax adviser

• How do I declare rent from Dubai, and which costs can I deduct — the service charge, costs before the first tenant, travel? How does the mortgage-interest reduction work for me?
• I am borrowing against my UK home to pay for the flat. Does that interest count for my lettings abroad?
• My first year will probably be a loss. How do I keep it for later years?
• Which exchange rate do I use for the rent, for each off-plan instalment and for the sale — and what records should I keep?
• If I sell my purchase contract before handover, how is that taxed — and could it count as trading?
• Is a serviced or hotel apartment a home or commercial property for the mortgage-interest rules? What changes if I let through a holiday-home operator?
• We are buying jointly. How are the rent and the gain split between us?
• Should I hold the property myself or through a company — and what would UAE corporate tax mean then?
• Am I a long-term UK resident for inheritance tax? How should my UK will and a Dubai will fit together, and what if I give the flat to my children?
• If I move to Dubai: when does my UK residence end, and what happens if I come back within five years?

Questions and answers

Related guides

• Proving where your money came from
• What can go wrong when you buy off-plan in Dubai
• What a guaranteed return is actually worth