UK State Pension Rules for Expats in Dubai: 2026 Update 

UK expats in Dubai face three major pension challenges: frozen payments with no annual increases, exchange rate risks on transfers, and higher voluntary contribution costs to protect entitlements. However, the UK state pension situation for Dubai expats remains complicated and challenging. Fixed annual increases, higher contribution costs, and complex payment rules surprise many and could lead to losing tens of thousands in retirement income. 

Understanding how relocation affects pension rights makes the difference between securing full retirement income and watching it diminish in real terms.  

This blog explains exactly what happens to UK State Pension entitlement when moving to Dubai.  

Will the State Pension still be paid in Dubai? 

Britons in Dubai continue to receive their UK state pension. Payments stay active no matter where they are, as long as they meet the qualifying criteria before leaving. 

For 2026, the new state pension pays £230.25 per week (£11,973 annually), while the older basic state pension provides £176.45 per week. From April 2026, these amounts rise to £241.30 and £184.90 respectively under the 4.8% triple lock increase. 

The International Pension Centre manages all overseas pension claims. Contact them approximately four months before reaching state pension age. Payments can go into UK or UAE bank accounts, though choosing a Dubai bank means receiving funds in dirhams, subject to exchange rate fluctuations. 

Does the State Pension increase each year in Dubai? 

Dubai-based expats face a substantial disadvantage here. The UAE appears on the “frozen pension” list, meaning UK state pensions paid there receive no annual increases under the triple lock guarantee. 

Approximately 453,000 British pensioners worldwide have frozen pensions, receiving on average just £3,000 annually, nearly £4,900 less than UK-based retirees. Someone retiring to Dubai at 66 could miss roughly £26,000 over 15 years, assuming modest 2.5% annual increases. 

The triple lock ensures pensions rise by the highest of inflation, average earnings growth, or 2.5% for residents in: 

• European Economic Area countries 

• Switzerland 

• Countries with reciprocal agreements (USA, Philippines, Turkey, Jamaica, Mauritius, Barbados, Bermuda) 

The UAE has no such agreement. Once claiming begins while living in Dubai, the pension amount locks permanently at that initial rate, regardless of UK inflation or wage growth. A pensioner who retired to Dubai in 2000, receiving £67.50 weekly, would still get this amount in 2025, while UK-based retirees receive £176.45, a weekly shortfall of £108.95. 

Can National Insurance contributions continue from Dubai? 

Maintaining National Insurance contributions from abroad remains possible, but significant changes take effect from April 2026 following the November 2025 Autumn Budget. 

Current position (until 5 April 2026): 

• Class 2 voluntary contributions: £3.50 per week (£182 annually) 

• Class 3 voluntary contributions: £17.75 per week (£923 annually) 

• Each qualifying year adds roughly £343 to annual pension income 

From 6 April 2026 onwards: 

The government announced the end of Class 2 voluntary contributions for expats. Only Class 3 contributions remain available, with stricter eligibility requirements. 

New applicants must have either: 

• Lived in the UK for at least 10 years continuously, or 

• Paid 10 years of UK National Insurance contributions before moving abroad 

For those currently paying Class 2, this represents a five-fold cost increase, from £182 to £923 annually. The government justifies this change by preventing people with minimal UK connections from accessing state pension cheaply. 

Anyone already paying Class 2 has until 5 April 2026 to make backdated payments for missing years. HMRC permits filling gaps back to 2006 until this deadline, after which the standard six-year limit returns. This creates urgency for Dubai expats who plan to maintain pension contributions but haven’t secured 35 qualifying years. 

How are UK pensions taxed for Dubai residents? 

Tax treatment provides one advantage of Dubai location for UK pension holders. Under the UK-UAE double taxation agreement, pension income is taxable only in the country of residence. Since the UAE imposes no income tax on pensions, UK state pension payments arrive gross and remain completely tax-free. 

Important considerations include: 

Government service pensions: Civil service pensions, teachers’ pensions, and similar government-funded schemes remain taxable only in the UK, regardless of UAE residence. 

Tax residence requirements: To benefit from treaty relief and receive private pensions gross, establishing genuine UAE tax residence is essential. Since 2022, this requires: 

• Physical presence in the UAE for over 90 days in a 12-month period 

• Strong ties to the UAE (residence, economic interests) 

• Holding a valid residency visa or being a UAE/GCC national 

• Obtaining a UAE tax residence certificate when requested 

Temporary non-residence rules: Returning to the UK within five years may trigger retrospective UK tax charges on certain pension withdrawals, particularly flexible drawdown payments. This applies if someone was UK-resident in four of the seven tax years before leaving. 

What about the 25% Tax-Free Lump Sum for Dubai based expats? 

The pension commencement lump sum (typically 25% of private pension pots) remains available to Dubai-based expats drawing from UK workplace pensions. This benefit is generally exempt from UK tax regardless of residence. 

For the remaining 75%, UAE residence means no tax liability in either country, provided tax residence status is properly established. This creates tax advantages compared with getting pensions while living in the UK, where pension income above the personal allowance faces income tax at 20%, 40%, or 45%. 

Are there banking requirements for receiving pension payments? 

Since 2025, the Department for Work and Pensions implemented stricter banking rules for state pension payments affecting overseas recipients: 

• Payments must go into accounts in the pensioner’s own name 

• Joint accounts are permitted but require proper documentation 

• Third-party accounts need official authorisation 

• Overseas banks must meet UK anti-fraud standards 

• Some UAE banks require additional verification 

Pensioners choose payment frequency: every four weeks or every 13 weeks. Payments to overseas accounts arrive in local currency, so actual amounts received fluctuate with exchange rates. With sterling-dirham rates varying significantly, a £230 weekly pension could fluctuate by several hundred pounds annually based on exchange movements. 

Bank details must be updated with the DWP within 14 days of any changes.  

(NOTE: The International Pension Centre operates on +44 (0) 191 218 7777, Monday to Friday, 8am to 6pm UK time.) 

Can UK pension pots be transferred to Dubai? 

Direct transfer of UK pensions to Dubai isn’t possible because the UAE has no HMRC-approved pension schemes. Consolidation options exist: 

International SIPPs (Self-Invested Personal Pensions): 

• Remain FCA-regulated UK schemes 

• Allow multi-currency withdrawals 

• Provide wider investment choice 

• Reduce currency exchange risks 

• Maintain HMRC approval and UK tax treatment 

Key SIPP benefits for Dubai expats: 

• No annual contribution limit on transfers (useful for consolidating multiple pots) 

• Non-residents can contribute up to £3,600 annually without UK earnings 

• Those with UK-relevant earnings may contribute more 

• Tax-free lump sum remains available 

• Remaining funds can be drawn flexibly 

International SIPPs suit Dubai expats better than standard SIPPs because they handle multiple currencies efficiently, protecting against GBP fluctuations when converting pension income. 

*NOTE: Some pension providers restrict overseas members or impose additional documentation requirements. Clarifying this before relocating prevents complications later. 

What action should be taken before moving to Dubai, UAE? 

For the pensioner planning to move to Dubai, time-sensitive decisions require attention before relocating: 

1. Check National Insurance record 

Use the online service at gov.uk/check-national-insurance-record to identify any gaps. Each missing year costs £343 annually in pension income. 

2. Consider backdated contributions 

Until 5 April 2026, gaps dating back to 2006 can be filled. After this date, only six years of backdating is permitted. Processing times extend several months, so early action is essential.  

For example, for someone who left the UK in 2008 without contributing since then will have to fill 18 years of gaps now, adding £6,174 annually to their future pension (18 × £343). After April 2026, only six years can be filled. 

3. Calculate frozen pension impact 

Someone moving to Dubai at 66 with full pension of £11,973 could miss over £26,000 in addition by age 81, assuming conservative 2.5% annual rises they won’t receive. At 3.5% annual increases (closer to recent triple lock rates), this shortfall exceeds £35,000. 

4. Review existing pension pots 

Multiple workplace pensions from different employers may benefit from consolidation into an International SIPP before moving. This simplifies administration and potentially reduces fees. 

5. Understand contribution changes 

Those planning to pay voluntary contributions need to secure the lower Class 2 rate (£182) before April 2026, when only Class 3 (£923) becomes available with tighter eligibility. Someone with 28 qualifying years needs seven more to reach the full 35 years. At Class 2 rates, this costs £1,274 total. After April 2026, the same seven years cost £6,461 at Class 3 rates, a £5,187 increase. 

6. Contact pension providers 

Some UK pension schemes restrict overseas members. Clarifying policies early prevents complications later. 

Does returning to the UK later make a difference? 

If you are planning to return to the UK, it will affect several pension aspects: 

1. State pension increases: Returning to a UK residence restores access to future increases under the triple lock (the highest of inflation, wage growth, or 2.5%). However, missed increases during the Dubai years are not backdated. Someone whose pension was frozen at £230 weekly for five years while living in Dubai would have missed roughly £50 in total increases. Upon returning, their pension increases from £230, not from the £280 it would have been if they had not missed those years stayed. 

2. National Insurance contributions: The eligibility rules for voluntary contributions “reset” when returning to the UK, possibly offering another opportunity to contribute if previously ineligible under the updated 10-year rule. 

3. Temporary non-residence: Returning within five years could lead to backdated UK tax on flexible pension withdrawals made abroad if the person was UK-resident in four of the previous seven years, leaving. Planning major pension withdrawals outside this five-year period can help avoid complications. 

4. Six-month residence requirement: To restart pension increases, returning pensioners must stay in the UK for at least six months. The International Pension Centre requires notification of the return. 

Conclusion 

With 453,000 British pensioners facing frozen state pensions worldwide, the financial impact of relocating to Dubai goes beyond initial tax savings. 

From April 2026, new contribution rules mean expats face annual costs of £923 instead of £182 to maintain pension entitlement. While pension payments remain permanently frozen at their starting rate, creating a potential £26,000 loss. 

Check your National Insurance record on GOV.UK. Find out if you’ve paid enough National Insurance to qualify for the full State Pension, check gaps, contributions and credits, get a National Insurance statement, call the helpline.