Wealthy British nationals fleeing Gulf conflict bypass UK to avoid tax bills

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Wealthy UK nationals fleeing war in the Gulf are seeking sanctuary in countries such as Ireland and France to avoid hefty tax bills back home.In the face of possible demands from HM Revenue and Customs, high-net-worth individuals who had been living in the United Arab Emirates and neighbouring countries are hoping to wait out the missile and drone attacks elsewhere rather than return to the UK.With only about three weeks remaining in the current financial year, many overseas residents have already “spent” their allocation of days in Britain without incurring tax liabilities.Some are seeking guidance from HMRC on whether they would be granted 60 extra days under an “exceptional circumstances” provision.Nimesh Shah, the chief executive of advisory firm Blick Rothenberg, said: “I’ve had a disproportionate number of calls from people wanting to leave the UAE in recent weeks.

“I’ve told them not to rely on any exceptional circumstances provisions from HMRC.I can’t imagine HMRC are very sympathetic here.”Shah added: “There’s UK taxpayers who have decided to leave to go to the likes of UAE.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.

”For those who have been non-resident for fewer than five years, it is not just income tax for the current year that could fall within HMRC’s scope if they return.They could also face capital gains tax on any assets or business sold during the period they were away.One very wealthy business owner told the Guardian he was spending time in Dublin until they could visit London after 5 April, when the 2025-26 tax year ends.“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.“I paid for my own travel home, by the way.

”Another British UAE-based business owner said they would spend some time in France for now.If someone claims to be non-resident for tax purposes, the number of days an individual can stay in the UK depends on several tests.These measure their ties to the UK and can include whether they have accommodation, a spouse or children in the country.For many individuals who have left in recent years, this can mean they are allowed as few as 45 days in the UK before they fall back into the domestic tax regime.For others, they may be allowed as many as 183 days in a tax year, depending on their circumstances.

During the Covid-19 pandemic, HMRC allowed some people to overspend their allowance without becoming tax resident in the UK.This 60-day exceptional circumstance provision was accepted for those cases in which people could prove they could not leave the country owing to the shutdown in international travel.To be successful they had to prove efforts were made to leave the UK.This is unlikely to apply in cases this time, tax advisers said.Travel guidance is also a factor.

The UK government’s travel advice for many of the affected countries such as Bahrain is “all but essential travel”, but according to guidance on the HMRC website, the exceptional circumstances provision would only kick in if the Foreign Office advises “no travel” at all.David Little, a partner at the wealth management firm Evelyn Partners, said: “Even a few extra days in Britain can have major consequences” with worldwide income and investment gains potentially becoming taxable as well as that from the UK.He added that for those who left and then sold assets, a return to the country could trigger a tax liability, with gains from a few years ago “retrospectively falling under UK taxation on their return”.
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