UK & UAE Tax and Company Terms Explained

Freezone

A UAE economic zone offering 100% foreign company ownership and, for companies meeting the Qualifying Free Zone Person conditions, access to a 0% UAE Corporate Tax rate on qualifying income. Freezone companies are built for operating within the zone and internationally; trading directly with UAE mainland customers generally needs a distributor, branch or additional registration.

Related terms: Qualifying Free Zone Person (QFZP)

Mainland

A UAE company licensed by an emirate's Department of Economy, able to trade anywhere in the UAE without restriction, including with government entities. Since the 2021 Commercial Companies Law changes, mainland companies are 100% foreign-owned in most sectors. Pays the standard 9% UAE Corporate Tax above AED 375,000, without the freezone route to 0%.

Related terms: Freezone

Qualifying Free Zone Person (QFZP)

The UAE Corporate Tax status a freezone company must hold, and keep holding, to access the 0% rate on Qualifying Income: adequate UAE substance, income within the qualifying categories, non-qualifying revenue under the de-minimis threshold, audited accounts, and no election into the standard regime. Losing QFZP status can mean losing the preferential rate for the whole period in question, not just on the disqualifying income.

Statutory Residence Test (SRT)

HMRC's test for whether an individual is UK tax resident in a given tax year, worked out through automatic overseas tests, automatic UK tests, and, if neither settles it, the sufficient ties test. Where your company is registered has no bearing on your own SRT position; it's assessed entirely separately.

Split-year treatment

A set of specific cases that divide a UK tax year into a UK part and an overseas part for someone who moves abroad or to the UK mid-year, rather than treating the whole year as UK-resident by default. The most common case for relocating directors requires starting full-time work overseas and meeting tight limits on UK days and workdays for the rest of the year.

Related terms: Statutory Residence Test (SRT)

Temporary non-residence (the five-year rule)

HMRC rules that tax specified income and gains realised while genuinely non-UK-resident if you were UK resident in at least 4 of the 7 tax years before leaving and return to the UK within 5 years, as if you'd never left, in the tax year you return. Catches gains on assets owned before departure (including selling a company) and certain close-company dividends.

Holding company

A company that sits above one or more operating companies, owning their shares rather than trading itself. A UAE holding company can consolidate ownership, dividends and a future exit in a 0% personal tax jurisdiction, commonly used by directors with multiple companies or planning a future sale.

Emirates ID

The mandatory UAE national identity card issued as part of the residency visa process, requiring biometrics and a medical fitness test: the one step in a UAE company setup that can't be completed entirely remotely from the UK.

Related terms: Entry permit (UAE)

Central management and control

The UK case-law test for company tax residence: a company is UK tax resident if it's centrally managed and controlled from the UK, regardless of where it's incorporated. A UAE-incorporated company run in practice from the UK, with board decisions genuinely taken by people genuinely there, remains UK tax resident.

Related terms: Statutory Residence Test (SRT)

IR35 / off-payroll working

Rules testing whether someone providing services through their own limited company would, if that company were removed from the arrangement, look like a direct employee of the end client, based on control, substitution, and mutuality of obligation. Status is assessed per engagement, not as a single label for the whole company.

Business Asset Disposal Relief (BADR)

A reduced Capital Gains Tax rate (18% for disposals from 6 April 2026, up from 10% before recent staged increases) on up to £1 million of lifetime qualifying gains when selling a trading company, conditional on a minimum 5% shareholding, officer/employee status, and trading-company status, each held for at least 24 months before sale.

Director's loan account

The running record of money owed between a director and their company that isn't salary, dividend, or expense reimbursement. An overdrawn balance not repaid within 9 months and 1 day of the company's year-end triggers Section 455 tax (currently 35.75% of the outstanding amount), refundable once repaid, but not for a long time afterwards.

Related terms: Section 455 · Close company

Making Tax Digital (MTD)

HMRC's requirement to keep digital records with an unbroken digital link to filed returns, rather than manually retyping figures between disconnected systems. Live for VAT since 2019; extends to Income Tax Self Assessment from 6 April 2026 for sole traders and landlords with combined qualifying income over £50,000.

Marginal relief (Corporation Tax)

The taper that smooths UK Corporation Tax between the 19% small profits rate (profits up to £50,000) and the 25% main rate (profits above £250,000), so the transition isn't a sudden cliff-edge. Has to be calculated and claimed on the return itself (it isn't automatic), and the effective marginal rate on profit inside the band works out higher than the 25% headline rate, at roughly 26.5%.

Qualifying Income (UAE Corporate Tax)

The category of income a UAE freezone company must earn, broadly, transactions with other free zone persons or specified activities with parties outside the free zone, to access the 0% Corporate Tax rate as a Qualifying Free Zone Person. Income outside these categories is taxed at the standard rate, and too much non-qualifying revenue can disqualify the company from the 0% rate entirely.

Related terms: Qualifying Free Zone Person (QFZP)

P45

The form a UK employer must give an employee when they leave, showing pay and tax deducted in the tax year to date. Comes up on a Dubai relocation whenever UK payroll closes or an employee-director leaves UK payroll as part of the exit.

P85

The form (or the equivalent self-assessment residence pages) used to tell HMRC you're leaving the UK to live abroad, supporting a claim to non-UK-resident status from your date of departure.

Related terms: Statutory Residence Test (SRT)

Companies House

The UK's registrar of companies, responsible for incorporation, the public register, and annual filing obligations such as the confirmation statement and accounts. Distinct from HMRC, which handles tax rather than company registration.

Trade licence (UAE)

The core UAE business licence issued by a freezone authority or an emirate's Department of Economy (for mainland companies), authorising a defined set of business activities. Renewed annually: the main recurring cost of running a UAE company, and the document a bank or EMI checks first when opening a corporate account.

Related terms: Freezone · Mainland · Electronic Money Institution (EMI)

UK-UAE Double Tax Treaty

An agreement between the UK and UAE governments that allocates taxing rights over the same income between the two countries and provides relief where both could otherwise tax it. A tie-breaker framework for genuine cross-border cases, not a blanket exemption from either country's own residence tests.

Controlled Foreign Company (CFC) rules

UK anti-avoidance rules that can tax a UK parent company on profits artificially diverted to an offshore subsidiary controlled from the UK, where those profits aren't taxed at a comparable rate abroad. Relevant to any UK-owned UAE entity claiming the 0% or 9% Corporate Tax rate.

Related terms: Central management and control

Transfer pricing

The requirement that transactions between commonly-controlled entities (for example a UK company and a UAE company under the same ownership) are priced on the same arm's-length terms unrelated parties would use, not however happens to minimise tax that quarter. Under-documented intercompany pricing is a common HMRC and UAE Corporate Tax risk area for cross-border groups.

Permanent establishment

A fixed place of business or dependent agent that creates a taxable presence for a company in a country where it isn't incorporated. Relevant to whether continuing UK activity after relocating creates a UK taxable presence for an otherwise UAE-resident company, or vice versa.

Member's Voluntary Liquidation (MVL) / strike-off

Two different ways to close a solvent UK company that's no longer needed. An MVL is a formal liquidation via a licensed insolvency practitioner, distributing remaining assets as capital (often at Business Asset Disposal Relief rates) rather than income. A strike-off is a simpler administrative removal from the register, appropriate for companies with minimal remaining assets; it doesn't offer the same capital-treatment route, so it's the wrong choice for a company with meaningful reserves.

Dormant company

A UK company registered at Companies House but not trading, receiving income, or incurring expenses. Filing obligations continue at a reduced level even while dormant. One option for a UK entity that's no longer trading after a Dubai relocation but isn't being wound down entirely.

Audited accounts (UAE)

Annual financial statements reviewed by an independent, UAE-registered auditor. A requirement for maintaining Qualifying Free Zone Person status in most freezones, regardless of whether the company is actually liable for Corporate Tax that year.

Related terms: Qualifying Free Zone Person (QFZP)

De-minimis threshold (UAE Corporate Tax)

The permitted limit on non-qualifying revenue a Qualifying Free Zone Person can earn without losing its 0% rate: the lower of AED 5 million or 5% of total revenue. Exceeding it disqualifies the company from the 0% rate for that period, not just on the excess income.

Close company

A UK company controlled by five or fewer shareholders, or by any number of director-shareholders. Most owner-managed limited companies are close companies. The classification triggers specific rules, including Section 455 tax on overdrawn director's loans and treatment of certain dividends under the temporary non-residence rules.

Section 455

The Corporation Tax Act 2010 provision charging a UK company tax, currently 35.75%, matching the additional dividend rate, on an overdrawn director's loan account not repaid within 9 months and 1 day of the company's year-end. Refundable once the loan is repaid, but not until much later: a genuine cash-flow cost, not just a paper one.

Related terms: Director's loan account

Electronic Money Institution (EMI)

A UAE-regulated payment institution that can hold and move company funds and issue account details for receiving payments, without holding a full banking licence. Typically onboards new companies faster than a traditional bank, but with lower transaction limits and fewer services: no cheque books, more limited trade finance.

Related terms: Trade licence (UAE)

KYC (Know Your Customer)

The identity-verification and due-diligence checks banks and EMIs must complete before opening an account, confirming who owns and controls the company, where its funds come from, and what it actually does. The main driver of how long UAE corporate banking approval takes.

Entry permit (UAE)

The document allowing entry into the UAE to complete a residency visa, issued after a company sponsors an individual for a visa. Precedes the status-change, medical test and Emirates ID stages: the sequence that ends in a stamped residency visa.

Related terms: Emirates ID

UBO (Ultimate Beneficial Owner)

The individual who actually owns or controls a company, as opposed to whoever is named on paperwork on their behalf. UAE banks require a UBO declaration before opening a corporate account, and it must stay consistent with the trade licence and UAE Corporate Tax registration. Inconsistent ownership information across those three documents is a common, avoidable cause of banking delay.

Related terms: KYC (Know Your Customer) · Trade licence (UAE)

Flexi-desk

A shared workspace arrangement (a desk in a co-working space rather than a dedicated private office) that satisfies a freezone's office requirement for licensing purposes. Cheaper and faster to set up than a private office, but it typically comes with a smaller visa quota, since visa allocation is usually tied to the office/facility type on the licence.

Related terms: Trade licence (UAE) · Freezone