'Is it possible for my wages to be withheld when I take time off due to illness during the probationary period?'
UK Residents and Overseas Rental Income: A Tax Reminder
In a world where many individuals own properties in multiple countries, it's essential to understand the tax implications of such investments, especially for UK residents.
UK Residents Must Declare Rental Income from Overseas Properties
If you are a UK tax resident, any rental income earned from an apartment in the UAE, or any other country for that matter, must be declared for UK tax purposes[1][2][5]. The UAE does not tax rental income, but the UK taxes its residents on their worldwide income, including rental income earned abroad.
Taxation of Overseas Rental Income
The rental income is taxed at your marginal income tax rate in the UK, after deducting allowable expenses, similar to UK property income[3][5]. You benefit from the UK personal allowance (£12,570 in 2025/26) against your total income, including rental income[3].
Double Taxation Agreement
The UK and UAE have a Double Taxation Agreement, which generally ensures you are not taxed twice on the same income. Since the UAE does not tax rental income, this mainly confirms you report it in the UK[1][4].
Exchange Rates and Expenses
Rental income is converted into GBP using exchange rates at the time rent is due, and expenses related to the property can be deducted as usual[5].
Case Study: AR's Probationary Period in the UAE
AR, who is an employee in the UAE, recently caught a cold and was too ill to work for two days. Unfortunately, they were told they will not be paid for these days as they are still on probation. According to the UAE Labour Law, during the probationary period, a worker is not entitled to paid sick leave[6]. However, employers in the UAE can choose to grant sick leave without pay during the probationary period[7].
BH's UAE Apartment and UK Tax Obligations
BH, a UK citizen and resident who moved back to the UK in January 2024, owns an apartment in the UAE. BH's income from this apartment, which was bought using UAE income, must be declared to HMRC even if the money never enters the UK[5]. Failure to disclose UK tax liabilities in relation to overseas or offshore income and gains can result in penalties[8]. Ignorance of the law is not considered a reasonable excuse for not disclosing overseas income or a gain[9].
Seeking Advice and Minimizing Future Taxation
For anyone leaving the UAE or another Gulf country to return to a country with income and capital gain taxes, seeking advice is recommended. There may be ways to minimize future taxation[10]. Not all vehicle insurance policies permit any driver, so it's essential to check with your insurance company to clarify and, if necessary, have a cousin or someone else added as an authorized driver[11].
[1] https://www.gov.uk/tax-foreign-income [2] https://www.gov.uk/government/publications/non-resident-landlords-uk-property-income/non-resident-landlords-uk-property-income [3] https://www.gov.uk/guidance/income-tax-your-uk-property-income [4] https://www.gov.uk/government/publications/double-taxation-agreements-with-other-countries/double-taxation-agreements-with-other-countries [5] https://www.gov.uk/government/publications/foreign-income-and-capital-gains/foreign-income-and-capital-gains [6] https://www.ministryoflabour.gov.ae/en/legislation/laws/labour-law/article/46 [7] https://www.ministryoflabour.gov.ae/en/legislation/laws/labour-law/article/45 [8] https://www.gov.uk/government/publications/failure-to-notify-overseas-income-or-a-gain-penalties/failure-to-notify-overseas-income-or-a-gain-penalties [9] https://www.gov.uk/government/publications/failure-to-notify-overseas-income-or-a-gain-penalties/failure-to-notify-overseas-income-or-a-gain-penalties [10] https://www.gov.uk/government/publications/leaving-the-gulf-cooperation-council-states/leaving-the-gulf-cooperation-council-states [11] https://www.gov.uk/government/publications/driving-in-the-uae/driving-in-the-uae
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