Why Moving Your Business to Dubai Could Save You Millions Under the New UK Budget

As the UK government’s recent Autumn Budget tightens tax policies, businesses operating in Britain face a considerable increase in tax burdens across corporate profits, employer costs, and owner earnings. For successful businesses, especially those with higher revenue and profit margins, relocating to Dubai offers a strikingly more cost-effective option. This article will break down the exact impact of the UK’s new tax rules on two hypothetical companies—a marketing agency and a recruitment firm—and highlight the financial benefits these businesses would realize by moving operations to Dubai.

1. Higher Corporate Tax Rates: 25% in the UK vs. 9% in Dubai

The recent UK budget sets the corporate tax rate at 25%, up from previous levels. For a marketing or recruitment agency with annual revenues between ￡5 million and ￡7 million and 30% profit margins, this increase results in significant costs.

• UK: A marketing agency with ￡1.8 million in annual profit would owe ￡450,000 in corporate tax. A recruitment agency with ￡1.5 million profit would pay ￡375,000.
• Dubai: At a 9% corporate tax rate, the Dubai-based marketing agency would only pay ￡162,000, and the recruitment agency ￡135,000. This is a savings of over ￡280,000 per year per company

2. Capital Gains Tax Increases: 24% in the UK vs. 0% in Dubai

The UK budget has increased the capital gains tax (CGT) rate, raising it to 18% for basic gains and 24% for higher gains on assets sold. This increase targets business owners looking to sell company shares or assets.

• UK: If the marketing agency’s owner sells the company, they could pay up to ￡432,000 in CGT on a ￡1.8 million gain. The recruitment agency’s owner would face up to ￡360,000 CGT on a ￡1.5 million gain
• Dubai: Dubai imposes no capital gains tax, so owners would retain the full sale value of their company assets. This makes Dubai particularly attractive for owners considering a future sale, potentially saving hundreds of thousands in taxes.

3. National Insurance Contributions (NIC) for Employers

In April 2025, UK employer NIC rates are set to increase to 15%, with the earnings threshold dropping from ￡9,100 to ￡5,000. This adds considerable costs for UK employers, especially those with larger payrolls.

• UK: For a ￡1 million payroll, the marketing agency would incur an additional ￡150,000 annually in NIC. The recruitment agency, with a ￡1.5 million payroll, would pay ￡225,000 in NIC.
• Dubai: No equivalent employer tax exists in Dubai, allowing businesses to save these amounts annually

4. Value-Added Tax (VAT): 20% in the UK vs. 5% or No VAT in Dubai

The UK’s 20% VAT rate applies to many goods and services, affecting the final cost for clients and impacting business cash flow. Conversely, Dubai’s VAT is only 5%, and businesses in certain free zones are VAT-exempt when conducting business outside the UAE.

• UK: A marketing agency with ￡6 million in VAT-applicable revenue could face ￡1.2 million in VAT costs, while a recruitment agency with ￡5 million in revenue could pay up to ￡1 million in VAT.
• Dubai: By either qualifying for the UAE’s VAT-free zones or paying the 5% rate, both companies would save nearly ￡1 million annually on VAT alone, compared to the UK

5. No Personal Income Tax in Dubai

In the UK, personal income tax rates reach up to 45%, affecting business owners drawing salaries or dividends. This further reduces post-tax income and limits the financial return of running a business.

• UK: Income from dividends or salary would be taxed heavily, reducing owners’ take-home pay.
• Dubai: There is no personal income tax, allowing business owners in Dubai to retain 100% of their income

Example Cost Comparison for UK vs. Dubai: Marketing and Recruitment Agencies

Let’s see how the numbers compare for both companies, assuming they move their operations to Dubai:

Key Takeaways: Why Moving to Dubai is a Financial Advantage

1. Significant Tax Savings: The combined savings in corporate tax, NIC, and VAT alone create savings between ￡1.8 million and ￡2 million per year per company.
2. Greater Profit Retention: Business owners keep a higher percentage of their earnings due to zero personal income tax and capital gains tax in Dubai.
3. Business-Friendly VAT Rules: Dubai’s low 5% VAT rate and VAT-free zones make compliance and operational costs lower.
4. Ease of Business Formation: Dubai offers a faster, streamlined process for setting up businesses, often within days, with 100% foreign ownership in free zones.
5. Strategic Market Access: As a global business hub, Dubai provides easy access to high-growth markets in the GCC, Asia, and Africa.

Conclusion

For UK-based companies, the financial contrast is stark. With mounting tax pressures and regulatory complexity, the UK’s business landscape is challenging profitability and long-term growth. Dubai, on the other hand, offers a low-tax environment that significantly reduces annual costs, making it a highly attractive destination for relocation. Businesses in Dubai enjoy a pro-business environment where profits, growth, and ownership retention are optimized.

For business owners, relocating to Dubai could mean the difference between high operating costs and maximizing the value of hard-earned revenue. With these changes, Dubai isn’t just a tax haven; it’s a compelling and strategic business solution.

Contact me at [email protected] so we can have an informal chat and see if you and your business would be better off.