Best Pension Options For UK Expats In The UAE

The United Arab Emirates is quickly becoming a hotspot for UK expats seeking a fresh start abroad, with an estimated 240,000 Brits now living in Dubai alone, and other cities such as Abu Dhabi growing in popularity.

With the absence of personal income tax and capital gains tax, abundant career and business opportunities and a vibrant and luxurious lifestyle, it's no wonder so many British citizens are being drawn to the UAE. UK expats planning a move can expect warm weather year round, modern and efficient infrastructure and a well established expat community. 

To take full advantage of the region's favourable tax environment, it is important to ensure that your long-term financial plans are on track, including optimising your UK pension scheme. Choosing the right pension structure as an expat can be daunting, but it can also be an opportunity to ensure that your retirement planning is aligned with your lifestyle and objectives.

This guide will explore the best pension solutions available to UK expats in Dubai and the UAE and highlight the key considerations for those who want to secure a tax-efficient and flexible retirement strategy abroad.

The Wealth Genesis | UAE

How Will Your UK Pension Be Taxed in the UAE?

One of the main attractions of the UAE for UK expats is its tax treatment of pension income. The UAE does not impose income tax on residents, meaning that UK pension income received while living in Dubai or elsewhere in the UAE is not subject to local taxation. This applies whether an individual is already drawing benefits in retirement or is planning ahead while working abroad, and it can significantly improve the long-term efficiency of a pension strategy compared with remaining UK resident.

However, the absence of UAE tax does not remove the UK from the equation. The UK may retain taxing rights over pension income depending on the type of pension, how and where it is held, and an individual’s residency status under UK statutory residence rules. Defined contribution pensions generally offer greater flexibility than defined benefit schemes, but withdrawals can still give rise to UK tax if they are poorly structured or if UK residency is re-established in the future.

For UK expats in the UAE, whether they expect to stay for a few years, relocate elsewhere, or eventually return to the UK, understanding this interaction is critical. Pension planning must account for both jurisdictions, ensuring the chosen structure remains tax-efficient and adaptable across different stages of life and changes in residency.

Transfer to QROPS in the UAE

QROPS (Qualifying Recognised Overseas Pension Schemes) were once commonly used by UK expats moving to lower-tax jurisdictions. While these schemes continue to exist in certain countries, their relevance for UK expats living in the UAE has reduced significantly as a result of regulatory change and the way HMRC now applies the Overseas Transfer Charge (OTC).

Due to recent changes to legislation, the OTC of 25% will be applied to any QROPS transfers to a scheme based in a different jurisdiction from where the individual is resident. Since there are currently no HMRC-recognised QROPS based in the UAE (see the full list here), if you were to transfer your UK pension to a QROPS, it would need to be to a scheme located in a different country on the approved list, which would mean losing a quarter of your pension savings just to tax. 

While a QROPS may still be suitable in limited and highly specific circumstances, it is no longer an appropriate solution for the majority of UK expats in Dubai and the rest of the UAE due to the tax implications. For most, the potential application of the Overseas Transfer Charge, combined with long-term planning considerations, has shifted the focus towards more flexible pension arrangements that better accommodate international mobility and future changes in residency.

International SIPP for UK Expats in The UAE

Unlike QROPS, an International SIPP (Self Invested Personal Pension) is a UK-registered pension scheme that has been specifically structured to meet the needs of UK expats living overseas, including those based in the UAE. While most traditional UK pension arrangements impose access and management limitations on expats, an International SIPP is designed for non-UK residents and internationally mobile individuals, offering greater control and flexibility and remaining within a familiar and well-regulated UK framework.

For UK expats living in Dubai and the UAE, an International SIPP can provide a practical way to consolidate one or more existing UK pensions into a single, flexible scheme. These solutions typically offer a far wider range of investment options than standard workplace schemes, including global equities, funds, exchange-traded funds and professionally managed portfolios. This array of choice allows you to align the underlying investments of your pension with your individual risk tolerance and long-term financial goals.

International SIPPs are particularly well suited to globally mobile expats due to the  multi-currency options, which help to mitigate currency exchange risk. This is especially relevant for individuals whose day-to-day spending may be in dirhams, who expect to draw income in sterling in the future, or who may relocate to another country as their circumstances change. Subject to UK pension rules, benefits can be accessed with flexibility while maintaining clear oversight of the underlying investments.

Most importantly, because an International SIPP remains a UK-registered pension, it can provide continuity for individuals who may eventually return to the UK or even move elsewhere, avoiding unnecessary complexity or further restructuring.

Residency Planning Considerations for UK Expats

For UK expats living in the UAE, pension planning cannot be viewed in isolation from residency planning. Decisions around where your pension is based, the underlying investments and how and when you can access pension benefits should always be considered alongside your current residency status and any future plans.

While drawing pension income as a UAE resident can offer significant tax benefits, this position may change further down the line if UK residency is re-established or if an individual relocates to another country. Different jurisdictions apply different tax rules to pension income, and a structure that works well in one location may be less advantageous elsewhere.

Viewing your retirement planning with a long-term lens can help ensure that your pension arrangements remain flexible and resilient, allowing you to adapt your strategy as your circumstances evolve. This is particularly important for expats whose careers, family commitments or retirement plans may span multiple countries over time.

Dubai Retirement Planning Example:

Consider a UK expat living in Dubai who has accumulated several UK workplace pension pots over the pan of their career. Although they expect to remain a UAE tax resident for at least the next decade, they still want the option to relocate elsewhere in retirement, or even eventually return to the UK.

By consolidating their pensions into an international SIPP, they gain a wide investment choice and the ability to manage their portfolio to align with their lifestyle and financial goals. Investments can be diversified globally and held across multiple currencies, reducing reliance on any single market and currency exposure. As their circumstances evolve, they can adjust their investment strategy without the constraints often imposed by traditional pension schemes.

When the time comes to draw pension income, the international SIPP provides flexibility in how and when benefits are taken, supporting their lifestyle planning while they remain resident in the UAE. If they later decide to move back to the UK or to another country, the portability of the structure means the pension can move with them, without the need for disruptive or costly transfers.

Our Verdict

For UK expats living in the UAE, pension planning is not just about choosing the right structure today, but about preserving flexibility for the future. The decisions you make while living in the UAE can influence how efficiently you can eventually access your retirement savings, how your investments are managed, and how easily you can move your pension should circumstances change.

The International SIPP has become a compelling option for many UK expats, offering investment choice, currency flexibility and portability without stepping outside the UK pension framework. While QROPS may still be appropriate in limited situations, the reality is that pension planning for expats has become more nuanced and requires careful consideration of both UK and international rules.

Given the cross-border nature of these decisions, guidance from a financial adviser who understands UK pensions, international regulation and the practical realities of expat life can be invaluable.

At The Wealth Genesis, we are regulated to help UK expats in Dubai, the UAE and across the Middle East with UK pension transfers. Our advisers can ensure your pension strategy supports your lifestyle today while remaining robust enough to adapt to wherever the future may take you. To learn more, book a free discovery call today.