The Post-Election Exodus: Why UK Residents Are Flocking to Dubai

Why are UK residents choosing Dubai as their new home post-election? The recent changes in UK policies are expected to trigger significant migration, especially among high-net-worth individuals (HNWIs) and skilled professionals.

This blog explores the factors driving this exodus and why Dubai is becoming their preferred destination.

The Political Shift: Key Changes Sparking Migration

What has changed in the UK post-election? The new government’s stringent policies on immigration and tax reforms have created uncertainty, prompting many to seek stability elsewhere.

Key Policy Changes and Their Impact

Let’s Start With Who Are the Non-doms:

Non-doms (non-domiciled individuals) are UK residents but are not UK nationals in the UK. 

They may have foreign nationality or domicile but live in the UK and are subject to UK-specific tax rules. 

The non-dom status allows them to be taxed differently on their foreign income and gains.

Abolition of Non-Dom Tax Status

Starting from 6 April 2025, the UK will abolish the non-dom tax status. 

It will be replaced by the new foreign income and gains (FIG) regime, allowing non-doms to not pay UK income tax and capital gains tax on their foreign income and gains for up to four tax years.

After four years, all foreign income and gains will be taxed in the UK, regardless of whether they are brought into the country.

This shift is part of a broader modernization effort to end preferential tax treatments that incentivize keeping income offshore.

Thus, this change affects many with significant foreign income, prompting them to consider relocating to more tax-friendly environments like Dubai.

According to Henley Private Wealth Management on millionaire migration trends, the UK is projected to see an exodus of 9,500 millionaires—more than double the number that left in 2023.

Recap & Key Points:

• Current rule: Non-doms pay UK tax only on UK earnings.
• New rule: From April 2025, non-doms will be taxed on global income after a four-year grace period.
• Impact: This reform is estimated to raise £2.7 billion annually by 2028/29, which is in addition to the current £8.5 billion that non-doms pay in UK tax each year.

Stricter Immigration Controls

New immigration policies have tightened controls on non-UK residents, affecting:

• Highly skilled workers: Doctors, scientists, and tech professionals face challenges securing long-term residency.
• International students: The new system imposes more stringent visa requirements compared to the pre-Brexit era.

Data:

• Net migration changes: Post-Brexit, non-EU net migration rose sharply, while EU net migration fell into negative territory.
• Sector impact: Health and care industries saw the highest demand for migrant workers, driven by policies introduced in 2022.

Zooming In: Migration Data and Trends

The composition of net migration has changed drastically since the Brexit referendum. Shortly before the 2016 referendum, EU citizens made up a majority of all net migration to the UK. 

However, this began to fall post-referendum, even though the UK remained part of the EU until 2020.

Net Migration of EU and Non-EU Citizens in the UK:

This shift is largely due to the post-Brexit immigration system, which is more restrictive towards EU citizens and more liberal towards non-EU citizens. 

In 2022, non-EU net migration reached 892,000, driven primarily by migrant workers and international students.

Why Dubai? A Magnet for Investors

The United Arab Emirates has been identified as the leading destination for attracting millionaires in 2024, according to a report by Henley Private Wealth Management on millionaire migration trends.

The country’s zero income tax rate, luxurious lifestyle, and golden visa program are expected to attract 6,700 new millionaires this year alone.

Although the influx of Russians moving to the UAE has recently slowed, this has been partly balanced by a growing number of European and British immigrants.

A Closer Look: Dubai’s Strategic Advantages

Dubai offers numerous benefits that make it an attractive destination for those leaving the UK:

• Tax-free environment: Dubai does not impose a personal income tax, making it a haven for HNWIs.
• Robust infrastructure: The city boasts world-class infrastructure, supporting both business and lifestyle needs.
• High living standards: The quality of life in Dubai is exceptional, with top-tier healthcare, education, and recreational facilities.

Demographic Shifts in Dubai’s Property Market

Recent reports indicate a significant demographic shift in Dubai’s real estate market. 

While interest from Russian buyers has cooled, other international investors, including those from the UK, have stepped in.

Key Insights

• British investors: Data from leading Dubai property agencies shows a surge in transactions from UK nationals. In Q1 2024, transactions from UK customers soared by 43% compared to the same period last year.

Economic Opportunities in Dubai

Real Estate Investments

Dubai’s real estate market is known for its high returns and resilience. Key benefits include:

• High rental yields: Dubai offers higher rental yields compared to major UK cities.
• Diverse and affordable investment options: From luxury villas to affordable apartments, there are opportunities for all investment levels.
• Economic stability and growth: Dubai’s diverse economy, driven by sectors like tourism, technology, and real estate, promises a stable market for investors. Unlike the uncertain economic conditions in the UK post-Brexit, Dubai’s proactive measures ensure continued growth.

According to Dominic Volek, Group Head of Private Clients at Henley & Partners, “An unprecedented 128,000 millionaires are expected to relocate worldwide this year, surpassing the previous record of 120,000 set in 2023.”

Shifting Preferences: Luxury Still Reigns

Popular Areas for Investment

• Dubai Marina
• Palm Jumeirah
• Downtown Dubai

These areas are known for their luxury properties and high-end amenities, attracting many British investors.

Dubai’s Golden Visa: A Long-Term Solution

Investing in Dubai real estate can also secure long-term residency through programs like the Golden Visa. 

This has become a major draw for retirees and professionals seeking stability and a high quality of life. Read more on UAE Property Golden Visa – How It Works

Ending note:

The recent political and economic changes in the UK are expected to lead many residents to look for better opportunities abroad. 

Dubai, with its favorable tax environment, robust infrastructure, and high standard of living, stands out as an attractive destination. 

Whether it’s for investment or long-term residency, Dubai offers compelling reasons for UK residents to consider making the move.

Additional Source Information

For detailed insights on the UK’s non-dom tax changes and their impacts, refer to the BBC News article published on April 9, 2024. For migration data, see the Migration Observatory article published on June 13, 2024.