Introduction

An increasing number of UK entrepreneurs are choosing to set up companies in the UAE while continuing to live in the UK. Dubai offers a business-friendly environment, low corporate tax, and global credibility — making it an attractive jurisdiction for international expansion.

However, setting up a UAE company while remaining UK-resident requires careful planning. Without proper structuring, business owners may not achieve the expected tax benefits and could unintentionally increase compliance risk with HMRC.

This step-by-step guide explains how UK residents can legally and practically set up a UAE company, what to consider at each stage, and how to remain compliant in both jurisdictions.

Step 1: Clarify Your Business Objectives

Before choosing a Free Zone, licence, or structure, it’s essential to define why you are setting up a UAE company.

Common objectives include:

• Serving international or offshore clients
• Separating non-UK income streams
• Establishing a regional hub
• Preparing for future relocation
• Improving operational efficiency

Clarity at this stage ensures the structure supports your long-term goals — not just short-term tax considerations.

Step 2: Understand Your UK Tax Position

If you remain UK-resident, your global income is potentially subject to UK tax. This means:

• UAE incorporation alone does not remove UK tax exposure
• HMRC will assess where management and control take place
• Transfer pricing and substance matter

UK entrepreneurs must plan structures that are commercially justifiable and compliant, rather than purely tax-driven.

Step 3: Choose the Right UAE Jurisdiction

For UK residents, Free Zone companies are often the preferred choice due to:

• 100% foreign ownership
• Faster setup
• Lower costs
• International focus

The right Free Zone depends on:

• Business activity
• Budget
• Banking requirements
• Future visa needs

Choosing the wrong jurisdiction can cause delays and compliance issues later.

Step 4: Select the Correct Business Activity

Your licence activity must accurately reflect what the business actually does.

Activities commonly chosen by UK entrepreneurs include:

• Consultancy and advisory services
• Engineering and technical services
• Management and holding activities
• Trading and sourcing
• IT and digital services

Incorrect activity selection can impact:

• Banking approval
• VAT treatment
• Corporate tax eligibility

Step 5: Incorporation and Licensing

Once jurisdiction and activities are selected, the incorporation process typically involves:

• Passport and KYC documentation
• Application submission
• Trade licence issuance
• Establishment card creation

In most cases, licensing is completed within 1–2 weeks.

Step 6: Opening a UAE Bank Account

Banking is often the most challenging part of the process.

Banks will assess:

• Business activity
• Ownership structure
• Source of funds
• Substance expectations
• Compliance history

Preparation is critical. Clear documentation and realistic expectations significantly improve approval timelines.

Step 7: Corporate Tax and VAT Registration

All UAE companies must:

• Register for Corporate Tax
• File annual returns, even if no tax is payable

VAT registration may be required once the threshold is exceeded.

Early accounting setup ensures:

• Clean records from day one
• No retrospective corrections
• Smooth compliance

Step 8: Accounting and Ongoing Compliance

Once operational, your UAE company must maintain:

• Accurate bookkeeping
• VAT-ready records
• Corporate tax documentation
• Bank reconciliations

Monthly accounting is strongly recommended, particularly for UK residents managing overseas entities.

Step 9: Managing the Business While Living in the UK

To reduce UK tax risk, business owners should:

• Clearly document decision-making
• Separate UK and UAE operations
• Maintain proper contracts between entities
• Avoid informal arrangements

Professional coordination between UK and UAE advisors is essential.

Common Mistakes UK Entrepreneurs Make

• Assuming UAE incorporation removes UK tax
• Running the UAE company entirely from the UK
• Poor record-keeping
• No substance planning
• Ignoring compliance obligations

These mistakes are avoidable with the right advice.

How A2Z Accounting Dubai Supports UK Entrepreneurs

We help UK-based founders by:

• Advising on compliant structures
• Supporting Free Zone setup
• Coordinating accounting and tax compliance
• Maintaining clean records
• Providing long-term advisory support

Our approach prioritises clarity, compliance, and sustainability.

When a UAE Company Makes Sense — and When It Doesn’t

A UAE company is most effective if you:

• Earn £150k+ in profits
• Serve non-UK clients
• Operate internationally
• Are planning for growth or relocation

It may not be suitable for purely UK-based businesses with no international activity.

Conclusion

Setting up a UAE company while living in the UK is entirely possible — and can be highly effective — when done correctly.

Success depends on:

• Proper planning
• Correct structuring
• Ongoing compliance
• Professional guidance

With the right approach, a UAE company can support international expansion, operational efficiency, and long-term business growth.