If you are a British national living in Dubai or Abu Dhabi, the UAE’s approach to inheritance is, on the surface, exceptionally clean. There is no local inheritance tax, no estate tax, and no gift tax. Assets can pass to the next generation without any UAE tax charge on the transfer. For many British expats who have spent years paying into the UK tax system, this feels like a significant relief. But the UAE’s domestic position is only half of the picture. The other half is what HMRC continues to expect, and that part does not disappear when you move to the Gulf.
The UAE Has No Inheritance Tax: But There Are Succession Rules
Confirmed by PwC’s Worldwide Tax Summaries (last reviewed March 2026), the UAE imposes no inheritance, estate, or gift taxes on individuals. However, the UAE is an Islamic jurisdiction, and Sharia succession principles apply by default to Muslim residents. For non-Muslims (which includes almost all British expats), the position is more nuanced than it first appears.
Without a registered will, the UAE courts have historically applied Sharia-based distribution rules to all residents, regardless of nationality or religion. This meant that a British expat dying intestate in the UAE could see their estate distributed in a way that bore little resemblance to what they intended, with assets potentially frozen during a lengthy legal process and distribution ratios that differ materially from UK intestacy rules.
The situation has improved significantly. Non-Muslims can now register a valid will through the DIFC Wills Service Centre or, for Abu Dhabi, through the Abu Dhabi Judicial Department’s non-Muslim wills registry. A registered will allows non-Muslim residents to specify that their estate be distributed according to their own country’s laws. Without one, the default remains uncertain. This is not a hypothetical risk; it is a documented legal gap that affects British families in the UAE every year.
UK Inheritance Tax Follows You to Dubai
Here is the part that surprises many British expats who have been in the Gulf for years: if you remain UK-domiciled under HMRC’s rules, your worldwide estate (including UAE assets, UAE property, UAE bank accounts, and investments held anywhere in the world) remains exposed to UK inheritance tax at 40% above the nil-rate band of £325,000.
Domicile is not the same as tax residence. You can be a UAE tax resident and a non-UK tax resident under the Statutory Residence Test, and still remain UK-domiciled for IHT purposes. HMRC uses the concept of “domicile of origin,” which for most British nationals is the UK. Changing domicile requires demonstrating a genuine and settled intention to remain permanently in a new country, a difficult standard that many expats, who retain ties to the UK and may one day return, do not meet.
From April 2025, the UK moved to a residency-based test for IHT on non-UK assets. Under the new rules, once you have been non-UK resident for ten consecutive years, your non-UK assets begin to phase out of UK IHT exposure. This is a meaningful change, and for long-term British expats in the UAE, it creates a planning horizon worth understanding. But for most expats in the first decade of living abroad, UK IHT exposure on worldwide assets remains fully live, even in a country with zero local inheritance tax.
The Named Beneficiary Mechanism
A portfolio bond, an investment-linked insurance policy written out of a jurisdiction such as the Isle of Man or Guernsey, offers a structural solution to two of the problems described above simultaneously.
First, the named beneficiary. A portfolio bond is, legally, a life assurance contract. Like any insurance policy, it allows the policyholder to nominate one or more beneficiaries who receive the policy proceeds directly on death. This means the policy value does not form part of the estate for probate purposes. It passes outside both UAE probate (avoiding the uncertainty of local succession proceedings) and UK probate on the policy value. For British expats who have not registered a UAE will, or who are concerned about the administrative burden and delays of dual-jurisdiction probate, this is a material practical benefit.
Second, the IHT dimension. While a portfolio bond does not, in itself, remove a UK IHT liability on the proceeds (the policy value is still an asset of the estate for IHT assessment if the policyholder is UK-domiciled), when structured appropriately and held in trust, the policy proceeds can be arranged to fall outside the taxable estate. This is a technical area that requires specialist advice, but it is a well-established planning mechanism used by UK-based IFAs and cross-border advisers for decades.
Portability and the Dubai-to-Somewhere-Else Trajectory
One characteristic of the British expat community in Dubai is mobility. Dubai is often a staging post rather than a final destination, and British professionals arrive from London, spend five to ten years in the UAE, and then move on to Singapore, Hong Kong, Portugal, or eventually back to the UK. Each move creates a new tax residency situation, new local succession rules, and potentially a new set of reporting obligations.
A portfolio bond written out of the Isle of Man or Guernsey is designed to be portable across these moves. The underlying policy stays in force through jurisdictional changes, investments continue to be managed inside the wrapper, and the named beneficiary designation travels with the structure. Advisers such as RL360, Hansard, Friends Provident International, and Utmost International (names you may have come across in the Dubai market) all offer variants of this structure. What varies between them, and what matters more than the brand name, is the cost structure, the investment platform architecture, and the flexibility of the underlying contract.
If you are mid-way through a conversation with a local IFA, or have been handed an illustration and are trying to work out whether it is the right product for your circumstances, it is worth getting a second perspective before you commit. Request a free consultation here