Azeem Ibrahim: We have thousands of citizens in a war zone – Here’s how we welcome them home and fix the country

Dr Azeem Ibrahim OBE is the Chief Strategy Officer at the New Lines Institute for Strategy and Policy and author of A Greater Britain: Rethinking UK Grand Strategy and Statecraft 

Let me be blunt about what is happening in the Middle East because our government has been anything but.

The joint American and Israeli campaign against Iran is not a skirmish. It is not a limited operation. It is a fundamental restructuring of the regional order one that has already shuttered Dubai International Airport sent Iranian drones over Gulf cities that once felt as safe as Zurich and left tens of thousands of British nationals asking themselves a question they never expected to ask is it time to go home? The answer for many of them is yes. The question for this government is whether it is ready to say yes and were ready for you.

Right now, it isn’t. And that needs to change urgently imaginatively and with the kind of political boldness that this moment demands.

I have spent the better part of two decades advising governments on security policy in Washington in Whitehall at the G7. I was an adviser to the 2021 Integrated Defence and Security Review. I know what a genuine strategic opportunity looks like and I know just as clearly when governments are about to sleep through one.

This is that moment.

There are an estimated 250,000 British nationals living and working across the Gulf states in Dubai, Abu Dhabi, Riyadh, Doha, Kuwait City, Bahrain, Muscat. They are not for the most part oligarchs or tax exiles. They are engineers keeping the lights on in Jeddah. Teachers in international schools in Dubai. Nurses architects project managers bankers. Hardworking British people who chose the Gulf for opportunity and the sunshine and who have over years sometimes over decades accumulated savings in a zero tax environment that the UK could only dream of.

Many of them want to come home. The war with Iran has focused minds in a way that even Covid never quite managed. What they need from the British government is not a Foreign Office travel advisory telling them to avoid non-essential travel. They need an active positive financially intelligent welcome. Here is what I am proposing and what I have reason to believe is already being considered in Treasury circles.

It’s a three-month Remittance Tax Holiday.

Any British national abroad who remits savings to a UK bank account during a defined window would be exempt from UK income tax and capital gains tax on those funds provided they invest a minimum of 25000 in one of two new government backed bonds. Two bonds. Both sovereign guaranteed. Both tax free on interest payments for subscribing investors. The first a British Defence Bond paying 4.0 per cent fixed over five years with every penny of proceeds ring fenced for defence procurement missiles ships autonomous systems the domestic manufacturing base that two decades of peace dividend eviscerated. The second a GB Housing Bond paying 4.5 per cent fixed over five years directed entirely at building the social and affordable homes this country so desperately needs.

After meeting the 25,000 minimum the remainder of what they bring back is theirs to spend on a house a business a savings account their children’s school fees. No strings. No bureaucratic labyrinth. No Whitehall working group deciding how they should allocate their own hard-earned money. The economics are compelling. If 250,000 British nationals each remit an average of 100000 a conservative figure for professionals who have spent a decade in the tax-free Gulf the total inflow is 25 billion. The mandatory minimum subscriptions alone guarantee 6.25 billion in bond proceeds. If investors go further and the tax equivalent yield of 4.5 per cent tax free is over 7 per cent gross for a higher rate taxpayer making it one of the most attractive retail savings instruments in living memory total bond capital could reach 12 to 15 billion. Split roughly equally between defence and housing that is a transformational sum for both national priorities.

Let us talk about defence first because this is where the urgency is most acute.

The 2026 Iran conflict has exposed the brittleness of NATO and Western munitions stockpiles in a way that should alarm every serious policymaker. The UK has deployed assets in support of operations across the region. Those stockpiles do not replenish themselves. The government has committed to 2.5 per cent of GDP on defence roughly 75 billion a year but that commitment is stretched across a thousand competing demands and the Treasurys conventional borrowing appetite is not infinite. A British Defence Bond changes the equation. It is not borrowed money. It is voluntary private capital offered by citizens who want to see their country strong in exchange for a guaranteed return. This is how Britain financed two world wars. It is time to dust off the model.

And then there is housing.

The GB Housing Bond is if anything even more timely. We have a chronic decades long failure to build enough homes. Every returning British national who brings capital back and eventually wants to buy a property will find a market in which demand already vastly outstrips supply. The Housing Bond funds the supply side social housing affordable homes brownfield development so that the returning wave of expatriates does not simply inflate prices further but lands into a market that is expanding to meet them.

These two bonds are not in competition. They are complementary instruments addressing two of the three greatest challenges Britain faces security and shelter. The third growth is addressed by the investment activity of returning nationals themselves.

I am aware that some will say this is too generous. That it rewards people who left. That it amounts to a tax break for the comfortable classes.

I disagree forcefully.

These are British citizens. They built careers abroad because Britain frankly did not give them the opportunities they deserved at home. They paid taxes in their host countries they contributed to those economies, and they did so as ambassadors for British expertise and British values. Now they want to come back. Penalising them for doing so slamming them with a tax bill on savings they accumulated abroad in a crisis not of their making would be not just economically foolish but morally wrong.

Britain has long had an uncomfortable relationship with its diaspora. We either ignore them or we treat their return as a tax opportunity. This policy proposes a third path genuine welcome mutual benefit and a clear national purpose. You come home you invest in the country the country invests in you.

The window will not stay open forever. The conflict in the Gulf is fluid. If Iran stabilises or if regional economies recover faster than expected the incentive for British nationals to repatriate their savings will diminish. The government has perhaps six months to seize this moment.

The bonds are ready to be designed. The statutory instruments are straightforward. NSI can build the subscription portal. HMRC can process the certifications. British embassies in Dubai Riyadh Doha and Abu Dhabi can set up the advice desks tomorrow.

What is needed is political will. A Prime Minister willing to stand up and say we see you we want you back and here is what we will build together.

Two bonds. A tax holiday. A homecoming.

It is the simplest most elegant most patriotic economic policy this government could announce. The question is whether anyone in Number Ten is bold enough to announce it.