A new double tax agreement (DTA) between the UK and UAE, which goes live this week, has a surprising benefit that allows UAE residents to access their UK pension free of UK income tax, according to an expert at Old Mutual Wealth.

Having studied the detail of the treaty, David Denton, Head of International Technical Sales at Old Mutual Wealth, not only believes it represents a significant milestone in the relationship between both countries, but also offers up the interesting tax benefit to anyone who holds a UK pension. This could be British and other nationalities of expats who have a UK pension, but could equally apply to GCC investors who have saved into a UK pension scheme.

However, David also warns the new ruling may encourage people to strip out their pension savings, something which could have other implications.

He said: “For UK expats, stripping money out of a pension tax free needs to be balanced against future Inheritance Tax exposure and the need to ensure funds last throughout retirement – anyone considering accessing their cash under this new treaty should seek professional advice.”

The new DTA was negotiated and signed in 2016, and came into force on 25 December 2016, becoming effective for UK personal tax purposes from 6 April 2017. The UK has approximately 140 DTAs and the UAE has over half that number.

David continued: “As one of just a few countries, in international terms, previously not having a DTA with the UK, it is a treaty of some significance and symbolism for the UAE. DTAs like this are intended to enhance economic and trade relations, improve labour movement, and protect companies and individuals from direct or indirect double taxation.”

Determining tax residency for the UK revolves around the Statutory Residence Test 2013, whilst an individual is deemed resident in the UAE if they are domiciled there, it is their habitual abode or centre of vital interests. For those that meet this definition of UK non-resident and UAE resident, and are interested in the impact upon their UK pensions, Article 17 specifies that ‘pensions and other similar remuneration paid to a resident of a Contracting State shall be taxable only in that State’.

David added: “This appears to have the surprising effect that, subject to the normal 55 age requirement, those in a UK scheme offering flexi access drawdown courtesy of the ‘freedom and choice’ legislation in 2015, could access their pension fully and without tax. However, people need to take care to ensure they are not caught by the UK temporary non-residency rules.”


Old Mutual Wealth 

Old Mutual Wealth is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.

It has an adviser and customer offering spanning:

  • Financial advice delivered by the Intrinsic network in the UK and AAM Advisory in Singapore
  • Platform based wealth management and protection products delivered by Old Mutual Wealth in the UK and Old Mutual International globally
  • Asset management solutions delivered by Old Mutual Global Investors
  • Discretionary investment management delivered by Quilter Cheviot.

Old Mutual Wealth oversees £123.5 billion in customer investments (as at 31 December 2016).

Old Mutual Wealth is part of Old Mutual plc a FTSE 100 group that provides life assurance, asset management, banking and general insurance. Old Mutual is trusted by more than 19.4 million customers across the world and has a total of £394.9 billion of assets under management (as at 31 December 2016).


This press release is for journalists only and should not be relied upon by financial advisers or customers.

Please remember that past performance is not a guide to future performance. The value of investments and the income from them can go down as well as up and investors may not get back any of the amount originally invested. Exchange rate changes may cause the value of overseas investments to rise or fall. This press release is based on Old Mutual Wealth’s interpretation of UK and UAE tax law as at March 2017. We believe this interpretation is correct but cannot guarantee it.

This communication is issued by Old Mutual Wealth Management Limited, a Private Limited Company (Company Number 0604270), Old Mutual House Portland Terrace Southampton Hampshire SO14 7EJ. 


Source: Seven Media