London chefs open Gulf outlets as UK restaurant tax hits 20%

London restaurant owners are moving money and staff to the Gulf, citing a heavy domestic tax burden and better business conditions abroad. James Robson, co-owner of Fallow in St James's Market, signed a deal this week to open a branch in the region. He described the domestic tax situation as a tsunami that has pushed chefs to look for lower cost structures overseas.

Fallow serves 1,000 customers daily and has 650,000 Instagram followers. The restaurant gained fame for dishes like a whole cod's head in spicy butter sauce. Robson is not the only one making the move. Scott's of Mayfair has opened in Dubai, as have two Michelin-starred venues: Gymkhana, an Indian restaurant, and Park Chinois, a Chinese eatery. Bread Ahead, a bakery from Borough Market, has also branched out to the area, while Isabel's, a Mayfair favorite among politicians, opened in Abu Dhabi.

These openings happen despite recent conflicts in the Middle East. Earlier this year, the US-Israeli war in Iran caused bombardment in Dubai and led to an exodus of expatriates. Some local businesses are still recovering from the disruption. Dinner by Heston has been temporarily closed since the war's fallout. The Michelin guide faced criticism this month for listing 16 restaurants that were closed, a mistake attributed to inspections conducted before the conflict began.

Robson, speaking from Hong Kong where he is exploring Asian opportunities, named the Gulf, East Asia, and the United States as key growth targets. He said the Gulf actively encourages and assists business, while East Asia has a work ethic and tax system that puts the UK to shame. He noted that America champions business, but the tax structures elsewhere offer more advantage to operators.

The primary complaint is Value Added Tax on hospitality. The UK charges 20%, which is among the highest rates in Europe. The average restaurant VAT rate in Europe is about 12%. Italy charges just 10% on food sold in restaurants. Chefs are urging Chancellor Andy Burnham to cut the rate in next week's budget. Robson said the country sleepwalked into multiple anti-growth taxations in the last two budgets and expects more changes next week. He also pointed to a 25% corporation tax and a dividend tax of 40% or more, asking for VAT to align with European levels.

Michelin-starred chef Jason Atherton now spends one-third of his time at his Dubai restaurant. He said it is easier to make a profit abroad than in London. Robson said he does not resent paying UK tax and is proud to contribute to the national deficit. However, he argued that UK growth no longer offers a sensible balance of risk and reward. He is playing it safe at home and focusing his expansion efforts overseas.

Human rights campaigners are urging caution on these new investments. Felix Jakens, director of campaigns at Amnesty International UK, said the UAE has a poor record on workers' rights and protection from labor exploitation. He noted that the country spends heavily on its UK image, particularly through Manchester City, but that this should not distract from how workers are treated.

Migrant workers make up the majority of the UAE's population. They remain bound by a sponsorship system that ties them to their employers and exposes them to potential abuse. These workers are denied the right to form trade unions. Jakens said any UK business expanding into the Gulf must carry out proper human rights due diligence. This ensures kitchen staff are treated fairly, paid properly, and able to raise concerns without fear of losing their job or visa.