Financial Planning for Yemen and the Yemeni Diaspora: A Specialist Guide

Yemen has been engulfed in a devastating civil war since 2014–2015, pitting the internationally recognised government (supported by a Saudi-led coalition) against Houthi forces backed by Iran. The conflict has caused one of the world's worst humanitarian crises, with severe food insecurity, infrastructure destruction, and displacement affecting millions of Yemenis. The formal financial and banking system within Yemen has been severely impaired, with the central bank effectively split between Sanaa (Houthi-controlled) and Aden (government-recognised). This guide addresses the financial planning needs of the Yemeni diaspora in the UK and internationally mobile individuals with Yemeni connections, rather than providing guidance for investment or relocation within Yemen in the current environment.

This guide is for general information only. The situation in Yemen is active and dangerous. Financial commitments within Yemen carry extreme risk. You should seek specialist advice. The value of investments can fall as well as rise.

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Country Context and Humanitarian Situation

As of 2026, the conflict in Yemen, while subject to periodic ceasefire negotiations, remains unresolved. Key financial planning implications:

• Yemen's formal banking system is severely impaired. The Central Bank of Yemen (CBY) in Aden issues banknotes and attempts to maintain the Yemeni rial (YER), but the rial has experienced extreme depreciation. In Houthi-controlled areas, an older series of banknotes is in circulation, creating a dual-currency practical reality.
• International remittances to Yemen continue (cash-based and through informal channels) but face significant friction.
• Property and assets within Yemen are at risk from conflict, occupation, and destruction.
• International sanctions target specific Houthi entities and individuals (UN, US, UK, EU sanctions) but do not constitute comprehensive trade sanctions on Yemen as a jurisdiction.

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Yemeni Domestic Tax System (For Reference)

Yemen had a functioning tax system prior to the conflict administered by the Tax Authority. The pre-conflict framework included:

• Income tax: Progressive rates from 10–35% on employment and business income
• Corporate income tax: 20–35%
• Withholding taxes: On dividends, interest, and service payments
• No VAT was in force (a VAT reform had been under discussion)
• No inheritance or estate tax formally

The practical operation of the tax system varies dramatically by region and depends on which administrative authority controls the relevant area. For diaspora members receiving occasional income from Yemen (rent from property, business payments), the ability to collect, declare, and pay taxes is constrained by the conflict environment.

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UK Tax Obligations for UK-Resident Yemenis

UK-resident Yemeni nationals are taxed by HMRC on their worldwide income under standard UK rules. Key considerations:

• Remittances received from Yemen: Since the abolition of the remittance basis and non-dom regime on 6 April 2025, UK residents (other than recent arrivers eligible for the four-year Foreign Income and Gains regime) are taxed on the arising basis, so foreign income is taxable as it arises regardless of whether it is remitted. Practically, if the income cannot be accessed due to conflict or banking breakdown, HMRC has discretion to defer taxation — but this should be formally agreed with HMRC rather than simply not declared.
• Yemen-sourced income declared on UK returns: Employment or business income from Yemen (if any) should be declared on UK tax returns. Credit for Yemeni taxes paid (if any) may be available under UK unilateral relief provisions. No UK–Yemen DTA exists.
• Remittances sent to Yemen: Gifts to family in Yemen are not UK income tax events. UK IHT considerations on regular gifts are similar to other remittance situations — normal expenditure from income exemption, PETs, etc.

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Remittance Management

Sending money to Yemen is possible but complex. Formal channels (Western Union, MoneyGram) have at times faced restrictions on Yemen routes due to banking compliance concerns. The hawala informal money transfer system has historically been the primary mechanism for sending remittances to Yemen — it is widely used but not regulated, creating AML compliance considerations for UK-based senders.

UK banks may apply enhanced due diligence or restrict transfers to Yemen due to its AML risk profile. Documenting the purpose and recipient of remittances clearly is important for maintaining banking relationships.

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Yemen-Sited Assets

For diaspora members with property or business interests in Yemen:

Property: Yemeni property values, title security, and physical condition are all severely impaired by the conflict. Many properties have been damaged, occupied, or are inaccessible. Establishing current value for UK IHT purposes is practically difficult — HMRC guidance provides that where a realistic value cannot be determined due to circumstances such as active conflict, an estimated value based on best available evidence should be used.

Bank accounts: Yemeni bank accounts may be inaccessible or severely devalued due to the banking crisis and currency depreciation. UK-resident individuals with such accounts may have limited practical ability to bring funds to the UK.

Business interests: Active business interests in Yemen require ongoing assessment of their viability and value.

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Offshore Wealth Preservation

For Yemeni diaspora families who have accumulated savings in the UK or internationally, the standard UK wealth management framework applies:

• UK ISAs, pensions (SIPPs), and GIA investment accounts for UK tax-efficient savings
• Offshore investment bonds (Isle of Man, Luxembourg) for international clients with complex tax situations
• UK wills and estate planning for UK-sited assets
• Term life assurance and income protection insurance — particularly important given the vulnerability of cross-border families

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Estate Planning for Cross-Border Families

For UK-resident Yemeni families with assets in Yemen and the UK:

• A UK will covers UK-sited assets. For Yemeni-sited assets, succession under Yemeni civil law (which incorporates Sharia principles for Muslims) applies.
• UK IHT: since 6 April 2025 UK inheritance tax is based on long-term UK residence rather than domicile — a "long-term UK resident" (broadly, UK-resident in at least 10 of the last 20 tax years) is within scope on their worldwide assets, including Yemen-sited property and cash. The practical difficulty of valuing and realising Yemen-sited assets does not eliminate the UK IHT liability, though HMRC has mechanisms for deferred payment where assets are difficult to realise.
• Powers of attorney covering UK assets are particularly important for families with members in conflict-affected areas who may need to act on behalf of relatives who are incapacitated or inaccessible.

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Sanctions Compliance

UK sanctions relating to Yemen target specific Houthi leadership and related entities. These are targeted sanctions, not comprehensive country sanctions. Regular commercial transactions, humanitarian transfers, and remittances to ordinary Yemeni civilians do not require OFSI licences in most cases, but individuals or entities on the UK designations list must not be parties to any financial transaction without a licence. Checking the OFSI database before any significant Yemen-connected transaction is prudent.

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Practical Financial Planning Tips

1. UK tax filing: Ensure UK returns include any Yemen-sourced income. If income exists but cannot be accessed, engage with HMRC directly rather than simply omitting it.

2. Document remittances: Use formal channels where possible and document all transfers with purpose and recipient information.

3. Emergency fund in the UK: Given the uncertainty of access to Yemen-sited assets, maintain a robust emergency fund in UK accounts.

4. Powers of attorney: Register LPA (Lasting Power of Attorney) in the UK and consider equivalent instruments for Yemen-sited assets if possible through local legal contacts.

5. Specialist advice: This is an area requiring advisers familiar with conflict-affected jurisdiction planning, AML obligations, and the specific intersection of UK and Yemeni succession law. Generalist advisers are likely to be ill-equipped.

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How Global Investments Can Help

We provide UK-side financial planning and wealth management for Yemeni diaspora families in the United Kingdom. Our focus is on building and protecting UK-based wealth, managing UK tax obligations correctly, and supporting families with estate and succession planning that accounts for their cross-border circumstances.

For Yemen-specific legal matters, conflict-zone succession issues, and AML compliance questions, we work alongside specialist firms with relevant expertise.

Contact us for a confidential consultation.