UK hopes to lure expats back from UAE as war challenges Dubai’s appeal

The U.K. government is trying to turn geopolitical upheaval into an opportunity, encouraging thousands of Britons to reconsider life in Dubai, as war in the region threatens the city’s reputation as an attractive haven.

Around 240,000 British nationals live in the UAE. For years, they have been drawn by zero income tax, security, international schools, and a glamorous lifestyle. Now, with missiles intercepted over Gulf capitals and air travel repeatedly disrupted, the long-standing stability of Dubai expat life is being questioned.

Last week, Rachel Reeves, the U.K. finance minister, touted the country’s “competitive tax system” in a conversation with CNBC’s Sara Eisen at its “Invest in America” forum.

“We have the lowest rate of corporation tax in the G7,” she said, mentioning tax and investment incentives, encouraging firms to list in London, where they won’t have to pay stamp duty on shares for the first three years.

Reeves hopes to pitch Britain as a “safe harbour economy” for wealthy expats, and has said that the Treasury will revisit tax rules, Reuters reported, citing an anonymous official. The U.K. Treasury did not respond to a CNBC request for comment on this.

Early signs suggest the war has already triggered movement among British citizens living in the UAE, though not necessarily back to the U.K.

According to data cited by the Financial Times, roughly one in eight Britons living in the UAE, about 30,000 people, have left since fighting broke out on Feb. 28. CNBC reached out to the British Embassy and the Dubai Media Office, which could not confirm the numbers.

While many departures could be precautionary rather than permanent, the figures point to a rupture in what had been a steady migration from Britain to the Gulf.

Some families have returned temporarily to Europe, gravitating toward wealth hubs like Switzerland or sunnier, lower‑cost destinations such as Spain and Portugal to wait out the conflict. Whether Britain benefits from that reassessment may depend on how long the war lasts and whether the U.K.’s economic offer has genuinely improved.

Those exiting the UAE include families worried about security, professionals facing repeated flight suspensions, and entrepreneurs reassessing long‑term plans in a region that suddenly feels volatile.

Pressure has mounted for households with children. Schools across the Emirates were shuttered for weeks after the war began, shifting students to remote learning, prompting some parents, who CNBC has spoken with since the war began, to send children back to their home countries to complete the academic term at schools teaching in-person.

Dubai’s appeal was never solely financial. It sought to attract Westerners with the promise they could enjoy Middle East opportunities without Middle East instability.

The stakes for the U.K. are high.

Nearly 6,000 high‑growth British business owners relocated abroad between January 2024 and January 2026, according to a February analysis by Rathbones, citing filings in the U.K.’s official register of companies. The UAE was the single most popular destination, followed by Spain and the United States.

The exodus was heavily concentrated in London and the South East and dominated by the tech sector, where one in ten founders relocated overseas, per the analysis.

Tax remains the central fault line.

While the UAE levies no personal income tax or capital gains tax, Britain has tightened its long‑standing “non‑dom” regime for taxpayers whose permanent tax home is outside the country. It abolished the remittance basis from April 2025 and replaced it with a residence‑based system that taxes most long‑term residents on their worldwide income and gains.

Under the new rules, only recent arrivals to the U.K. who have spent at least 10 consecutive years abroad qualify for a limited four‑year exemption on foreign income and gains. After that, global income is fully taxable, a sharp break from the previous system that allowed wealth to remain offshore indefinitely.

The U.K. has also increased employer National Insurance contributions from 13.8% to 15%, while cutting the earnings threshold at which the tax applies.

The government has also slashed investors’ relief, reducing the lifetime allowance on capital gains qualifying for preferential treatment from £10 million to £1 million, or around $1.35 million, weakening incentives for founders backing early‑stage companies.

“I doubt that Rachel Reeves’ review will be enough to bring rich expats back from the UAE,” said Stallone Shaikh, founder of Alliance Street Consultancy, which helps entrepreneurs establish businesses in the UAE.

“For ultra‑high‑net‑worth individuals, these changes simply don’t move the needle,” Shaikh told CNBC. “The U.K. is punishing people for making money instead of encouraging them.”

Personal income tax in Britain now tops out at 45% on earnings above £125,140. Capital gains tax can reach up to 24%, while the UAE offers corporate tax of 0% on profits up to $100,000 and 9% above that.

Mahesh Patel, a 60‑year‑old British national who moved to Dubai in 2023, helps U.K. clients establish businesses in the UAE through Melrose Consultancy. While some of his contacts have discussed exit plans, Patel told CNBC that he has no intention of returning.

“I’m staying put,” he added. “If anything, I might look at Bangkok, Phuket or Bali — where the cost of living is a fraction of Dubai or the U.K.”

Patel said lifestyle, schools, and global connectivity remain a bigger anchor than tax alone.

Few observers expect a large-scale repatriation of Britons from Dubai. The UAE remains attractive, and many who have left may return if the conflict de‑escalates.

Henley & Partners, which helps the wealthy relocate to other countries, previously told CNBC that Dubai remains resilient, but clients tend to keep their options open amid uncertainty.

“Situations like this reinforce a core principle we often discuss with clients: the value of global optionality,” the firm’s group head of private clients Dominic Volek said.

Volek said that “internationally mobile families” typically have options in the Americas, Europe, the Middle East and Asia, adding: “These decisions are generally strategic and long-term in nature rather than reactions to short-term events.”