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The dual contract, a UK contract for UK duties and an offshore one for UAE duties, never made a UK resident’s UAE salary tax-free. It worked only under the remittance basis, abolished on 6 April 2025. A UK resident is now taxed on worldwide employment income as it arises, whether paid under one contract or two.
The arrangement still gets proposed in boardrooms and by the occasional wealth manager, and it still sounds clever. A C-suite executive splits their time between London and Dubai, so they sign two employment contracts: one with the UK company for UK duties, paid in sterling and fully taxed; and one with an offshore or UAE entity for the overseas duties, paid in dirhams into a Dubai account. The pitch is that the second contract's income is "foreign", earned abroad for a foreign employer, and so sits outside UK tax as long as it stays offshore. The executive keeps a UK life and a UK salary, and a second, larger, untaxed income runs in parallel in the Gulf.
The reason this feels plausible is that it used to be true, for a specific group of people, under a specific regime. It was never a feature of being UK resident. It was a feature of the remittance basis, the old rule under which a UK-resident, non-UK-domiciled individual could keep foreign income out of UK tax until it was brought into the UK. Under that regime, earnings from a genuinely separate overseas employment could be "chargeable overseas earnings" that were taxed only if remitted, so a clean split between UK and overseas duties, paid through separate employers, could shelter the overseas half offshore. The dual contract was a remittance-basis planning tool, and it lived or died with the remittance basis.
The remittance basis died on 6 April 2025. It was abolished and replaced by a residence-based system, and with it went the mechanism the dual contract relied on. A UK tax resident is now taxed on worldwide employment income as it arises, wherever the work is done and whoever pays for it. A UAE salary earned by a UK resident is UK-taxable in the year it arises, whether it is paid under one contract or two, and whether or not a single dirham is ever remitted. The second contract no longer produces "chargeable overseas earnings taxable only on remittance", because that category has gone. The paperwork can still be split; the tax cannot.
This is the correction the market has been slow to absorb, and it is more fundamental than the anti-avoidance rule most advisers reach for. HMRC did narrow dual contracts back in 2014, with section 24A of the Income Tax (Earnings and Pensions) Act 2003, and that provision is examined below because it still shows how HMRC reads a contrived split. But the decisive change is not that anti-avoidance rule. It is that the regime the whole structure depended on no longer exists. The dual contract did not need to be defeated in 2026. It lost its foundation in 2025.
What follows sets out what the dual contract was and why it once worked, why the abolition of the remittance basis removed the shelter at the root, the one genuine relief that survives for genuinely mobile new arrivers, and why a split contract cannot be used to inflate that relief. The conclusion is blunt: for a UK-resident executive in the corridor, the UAE half of a dual contract is UK-taxable, and treating it as free is a retrospective tax bill waiting to be assessed.
The structure had a genuine logic while the remittance basis existed, and understanding that logic is the fastest way to see why it has collapsed.
A UK-resident, non-domiciled employee who claimed the remittance basis was taxed on their UK earnings in full, but on their foreign earnings only to the extent those earnings were brought into the UK. The planning question was therefore how to make as much of the total package as possible into "foreign" earnings. The answer was to divide the single job into two employments: a UK employment covering the duties performed in the UK, and a separate overseas employment, with a different (often group) employer, covering the duties performed abroad. If the division was respected, the overseas employment produced chargeable overseas earnings, and those earnings escaped UK tax unless and until they were remitted. Kept in a Dubai account and spent in Dubai, they were, in practice, untaxed.
Two things always constrained this, even at its height. The first was substance: HMRC has long warned that it will look behind contracts that do not reflect the reality of the working arrangement, and a "split" that was really one job dressed as two was vulnerable to being collapsed. The second was section 24A, the 2014 anti-avoidance rule discussed below, which switched off the remittance-basis treatment for many dual contracts by forcing the overseas earnings onto the arising basis. So even before 2025, the dual contract was a narrowing, contested, substance-dependent structure, not the clean shelter its reputation suggested.
The reason people still ask about it in 2026 is partly lag and partly mis-selling. The corridor is full of executives who remember, or were told about, colleagues who ran dual contracts successfully years ago, and of advisers and HR functions who have not fully updated their scripts after the 2025 reform. The question "can I take part of my pay through a Dubai contract and keep it out of UK tax" is asked in good faith, on the basis of a regime that no longer exists. The honest answer has to start by explaining that the ground it stood on has been removed.
The single fact that resolves the dual-contract question in 2026 is the abolition of the remittance basis on 6 April 2025.
Before that date, the remittance basis let a non-domiciled UK resident defer UK tax on foreign income until remittance. From that date, it is no longer available. The system is now residence-based: a person who is UK tax resident is taxed on their worldwide income as it arises, and the domicile-driven remittance basis has been replaced by the residence-driven regime. Any unremitted foreign income and gains that arose before 6 April 2025 remain subject to the old rules if brought in later, and there is a time-limited facility for repatriating that historic wealth at a reduced rate, examined in the analysis of the temporary repatriation facility. But for income arising now, the remittance basis is simply not there to be claimed.
Apply that to the dual contract. The overseas employment's earnings used to be valuable precisely because, on the remittance basis, they could sit offshore untaxed. Take away the remittance basis and those earnings are foreign employment income of a UK resident, taxable on the arising basis in the year they are earned. Splitting the job into two contracts no longer changes the character of the income for UK purposes; it is all employment income of a UK-resident individual, and it is all within UK tax as it arises. The Dubai account is now just a place the already-taxable money happens to land.
There is one group for whom foreign employment income can still escape UK tax, and it is not the dual-contract user; it is the genuinely new arriver within a short, defined window, dealt with in the next section. For everyone else, the established UK-resident executive, the returning founder, the long-term corridor commuter, the arising basis governs, and the UAE salary is UK-taxable regardless of how the contracts are drawn. This is why the structure fails at the root in 2026. It is not that a clever anti-avoidance rule catches it. It is that the regime that made it work has been abolished, so there is nothing left for the split to shelter.
The abolition of the remittance basis did not leave globally mobile employees with nothing. It replaced the old shelter with a narrower, time-limited relief for genuine new arrivers, and it is important to state it accurately, both because it is the legitimate planning space and because it is the thing the dual contract is often confused with.
The four-year FIG regime. A person who becomes UK resident after a long absence can claim the Foreign Income and Gains regime, under which their foreign income and gains are not taxed in the UK for the first four consecutive tax years of residence, even if brought into the UK. Eligibility is strict: the individual must have been non-UK resident for the 10 consecutive tax years before the year they become UK resident. The four years are a fixed window that starts on arrival; gaps do not extend it. This is the relief that a genuinely new arriver to the UK uses, and it is generous while it lasts, but it is for the newly arrived, not for the established UK resident splitting contracts.
Overseas workday relief, reformed. Alongside the FIG regime sits Overseas Workday Relief, which from 6 April 2025 operates on a new basis. For an employee who qualifies for the FIG regime, OWR gives relief on the portion of their employment income that relates to duties performed outside the UK, for the same four-year window. The reform attached a financial limit that did not exist before: the relief is capped at the lower of 30% of the employee's qualifying employment income or £300,000 for the tax year. The old mechanism that delivered OWR for remittance-basis users has ceased to have effect for years from 6 April 2025; the relief now runs through the FIG-linked regime and its cap.
Read carefully, this is a relief for genuine overseas workdays, granted to a genuinely new resident, and it is capped. It is not a shield for a whole offshore salary, and it is not available to the established executive who has been UK resident for years and simply wants part of their pay treated as foreign. The dual-contract user and the OWR claimant are usually different people: the OWR claimant is inside a four-year window after a decade abroad; the dual-contract user is typically a settled UK resident trying to re-characterise ordinary current earnings. Confusing the two is how a legitimate relief gets stretched into an illegitimate claim.
Even where OWR is genuinely available, a dual contract cannot be used to enlarge it, and this is where the historic anti-avoidance rule and the current OWR rules point the same way.
The overseas workday rules limit associated-employment income. The reformed OWR regime does not let an employee inflate the relief by routing income through a second, associated employment. The rules cap the qualifying foreign employment income that can be treated as relieved where the employee has associated employments that are not performed wholly outside the UK. In other words, the anti-avoidance against contrived splits now lives inside the OWR regime itself: a genuinely separate overseas role performed abroad can generate relievable overseas workdays, but a second contract that mirrors or supports the UK role cannot be used to convert UK-linked pay into extra relieved foreign income.
Section 24A shows how HMRC reads a split. The provision the market still cites, section 24A of the Income Tax (Earnings and Pensions) Act 2003, was introduced in 2014 specifically to defeat dual contracts under the remittance basis. It forced the earnings from an overseas employment onto the arising basis, denying the remittance-basis shelter, where four conditions were met: the employee was UK resident; the UK employment and the overseas employment were with the same or associated employers; the two employments were related to each other; and the foreign tax on the overseas earnings was less than 65% of the UK's additional rate. Because the UAE levies no personal income tax, the last condition, a foreign rate below roughly 29% against the 45% additional rate, was always met in this corridor, and the "related employments" test is very hard for a director or senior executive to escape, since two roles for associated employers covering interlocking duties are treated as related. The provision was built on the remittance basis it was policing, and with that basis abolished its operative work for current earnings has largely fallen away. But it remains the clearest statement of how HMRC views a split: associated employers plus related duties plus a low-tax jurisdiction equals one taxable arrangement, not two.
Substance decides, not labels. Underneath both the OWR limits and the old section 24A conditions is a single principle HMRC applies to the whole area: it looks at the reality of the working arrangement, not the wording of the contracts. Where a "second" employment covers duties that are really part of the same senior role, for the same group, with terms that operate by reference to each other, HMRC treats it as one employment and taxes it as such. For a founder or C-suite executive, whose two contracts almost inevitably serve one interlocking role in one group, the split is transparent, and the relabelling does not survive contact with the facts.
The combined effect is that there is no version of the dual contract that both puts real money offshore and keeps it out of UK tax for a UK resident in 2026. Where the person is a settled UK resident, the arising basis taxes the lot. Where the person is a genuine new arriver, the FIG regime and capped OWR give a defined, honest relief that a split cannot enlarge. The structure has no space left to occupy.
Five beliefs turn a dead structure into a live liability. Each rests on a regime that no longer applies.
Trap one: believing the offshore contract is still tax-free. The executive assumes that because the UAE salary is paid abroad by a foreign entity, it is outside UK tax. Since the remittance basis was abolished on 6 April 2025, a UK resident is taxed on worldwide employment income as it arises, so the UAE salary is UK-taxable regardless of the contract split. The answer is to treat the UAE earnings as taxable UK income and plan the residence position, not the paperwork.
Trap two: confusing overseas workday relief with a shelter for the whole salary. The executive hears that OWR exists and assumes it exempts their Dubai pay. OWR relieves only the portion relating to genuine overseas workdays, only for a qualifying new resident inside a four-year window, and only up to the lower of 30% or £300,000. The answer is to check eligibility and the cap before relying on it, and never to treat OWR as a blanket exemption for an offshore contract.
Trap three: assuming a settled UK resident can use the FIG regime. The four-year FIG regime requires 10 consecutive tax years of non-UK residence before arrival. A person who has lived in the UK for years does not qualify, so there is no foreign-income relief to claim on the UAE salary at all. The answer is to establish, honestly, whether the individual is a genuine new arriver or a settled resident, because only the first has any relief.
Trap four: relying on the split surviving scrutiny. The arrangement is documented as two employments in the hope the labels hold. HMRC tests substance, and two contracts for associated employers covering an interlocking senior role are treated as related, and as one arrangement. The answer is to recognise that a split which mirrors the UK role has no independent character, and to price the tax on the reality.
Trap five: leaving the old structure running. An executive who set up a dual contract before 2025 keeps it in place, assuming grandfathering. The abolition applies to income arising on or after 6 April 2025, so the offshore earnings that were sheltered in prior years are now taxable as they arise, and the historic unremitted amounts carry their own treatment, including the temporary repatriation facility for pre-2025 balances. The answer is to unwind the arrangement into a single, correctly taxed employment and deal with the historic position separately.
The common thread is that every trap is a bet on a regime that has been repealed. The dual contract was a remittance-basis structure, and the remittance basis is gone.
The dual-contract question is really a residence and employment-tax question, and it connects to the rest of the corridor at the points where the executive's position is actually decided.
Residence is the first question. Whether the UAE salary is taxable at all turns on whether the executive is UK resident, which is decided by the Statutory Residence Test, not by where the contract is signed. The mechanics are set out in the analyses of the Statutory Residence Test and how residence actually ends on a move to Dubai. A dual contract does nothing to change residence; a genuine change of residence is what changes the tax.
The historic balances have their own route. Earnings sheltered offshore under the remittance basis before 6 April 2025 do not simply vanish into the new system. They remain within the old rules if remitted, subject to the reduced-rate window analysed in the temporary repatriation facility, which is the correct tool for cleaning up a pre-2025 offshore balance rather than pretending it is still untaxed.
The offshore employer may raise its own questions. Where the "overseas employer" is a group company the executive controls, paying a salary out of it engages the same transfer-pricing and related-party discipline that governs any intra-group charge, examined in the analysis of transfer pricing across the corridor, and the structure through which they own that company can bring the controlled foreign company and transfer-of-assets-abroad rules into play.
The return trap sits alongside. An executive who leaves the UK, takes UAE earnings free of UK tax as a non-resident, and then returns too soon can find the gap reopened by the temporary non-residence rule, set out in the analysis of the five-year clawback. The clean position depends on genuine, sustained non-residence, not on a contract structure held while UK resident.
The theme is the one that runs through the corridor. The dual contract looks like an employment-structuring trick and is in fact a residence question with an expired answer. For a UK resident, the UAE salary is taxable as it arises. For a genuine new arriver, a defined and capped relief exists and cannot be enlarged by splitting the job. The paperwork was never the point.
No, not for a UK resident. The dual contract worked only under the remittance basis, which let a non-domiciled UK resident keep foreign earnings offshore until remitted. The remittance basis was abolished on 6 April 2025, so a UK resident is now taxed on worldwide employment income as it arises. A UAE salary earned by a UK resident is UK-taxable whether it is paid under one contract or two, and whether or not it is brought into the UK.
If you are UK tax resident, yes. Since 6 April 2025 a UK resident is taxed on their worldwide employment income on the arising basis, so earnings from a Dubai employment are UK-taxable in the year you earn them, regardless of the offshore contract or the Dubai bank account. The only question that changes this is whether you are actually UK resident under the Statutory Residence Test, which is decided by your days, ties, and home, not by the contract.
Section 24A was an anti-avoidance rule introduced in 2014 to defeat dual contracts under the remittance basis. It forced the overseas employment's earnings onto the arising basis where the two employments were with associated employers, were related, and the foreign tax rate was below 65% of the UK's additional rate. It was built on the remittance basis it policed, so with that basis abolished its work on current earnings has largely fallen away. It still matters as a statement of how HMRC reads a contrived split: associated employers plus related duties plus a zero-tax jurisdiction are treated as one arrangement.
Overseas Workday Relief gives a qualifying new resident relief on the part of their employment income that relates to duties performed outside the UK, for their first four tax years of UK residence. From 6 April 2025 it runs through the Foreign Income and Gains regime and is capped at the lower of 30% of qualifying employment income or £300,000 a year. You can use it only if you qualify as a new resident, having been non-UK resident for the 10 tax years before arrival, and only for genuine overseas workdays, not for a whole offshore salary.
An individual who becomes UK resident after being non-UK resident for the 10 consecutive tax years immediately before the year of arrival. They can then avoid UK tax on foreign income and gains for the first four consecutive tax years of residence, whether or not the money is brought to the UK. The four years are a fixed window from arrival and do not extend for gaps in residence. A person who has been UK resident in any of those prior 10 years does not qualify.
No. The Overseas Workday Relief rules limit the qualifying foreign employment income that can come from associated employments, precisely to stop a contrived split inflating the relief. A genuinely separate overseas role performed abroad can generate relievable overseas workdays, but a second contract with an associated employer that mirrors or supports the UK role does not convert UK-linked pay into extra relieved foreign income. HMRC tests the substance, not the labels.
The abolition applies to income arising on or after 6 April 2025, so from that date the offshore earnings are taxable as they arise, and the split no longer shelters them. Any foreign income you kept offshore under the remittance basis before 6 April 2025 remains within the old rules if you remit it, but you may be able to bring it in at a reduced rate under the temporary repatriation facility. The right step is to unwind the dual contract into a single, correctly taxed employment and deal with the historic balance separately.
Yes, for the period you are genuinely non-UK resident, because a non-resident is not taxed by the UK on UAE-source employment income. But that depends on actually leaving the UK tax net under the Statutory Residence Test, not on holding an offshore contract while remaining UK resident, and on staying non-resident long enough that the temporary non-residence rule does not reopen the position on your return. Residence, not the contract, is what makes the difference.
The dual contract was never a property of being UK resident. It was a property of the remittance basis, a way of keeping foreign earnings offshore and untaxed until brought home. That regime ended on 6 April 2025. A UK resident is now taxed on worldwide employment income as it arises, so the UAE half of a split contract is UK-taxable whatever the paperwork says. A genuine new arriver has a defined, capped relief for real overseas workdays, and a split cannot enlarge it. The two contracts were only ever one tax position. Now they are one on the face of the return.
Gulf capital holding UK residential property through a fleet of offshore or UAE special purpose vehicles built the envelope as a shield. Since 6 April 2020 those companies are UK corporation taxpayers, and the associated companies rule divides one set of rate limits across the whole fleet.
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