“Reckless and self-defeating”: UK’s reported ‘exit tax’ plan slammed
The UK finance minister’s reported plan to impose a 20% ‘exit tax’ on the business assets of wealthy individuals leaving the UK would be “reckless and self-defeating,” warns Nigel Green, CEO of deVere Group, one of the world’s largest independent financial advisory and asset management organisations.
Rachel Reeves is said to be considering the introduction of a so-called ‘settling-up charge’ in this month’s Budget, targeting those relocating to lower-tax jurisdictions. The levy could apply capital gains tax to the holdings of people quitting the UK, potentially raising around £2bn for the Treasury.
Nigel Green says the proposal would inflict lasting damage on the country’s competitiveness at a critical time
“The government seems determined to make the UK an increasingly unattractive place for wealth creators. The introduction of an exit tax would accelerate the exodus of entrepreneurs, business owners and investors who already feel punished for their success,” he says.
“This policy wouldn’t just fail to raise meaningful revenue; it would destroy confidence, reduce investment and, ultimately, cost the Treasury far more in lost economic activity than it could ever recoup through short-term taxation.”
deVere Group has witnessed a significant rise in domestic and global investors rethinking their exposure to the UK due to the growing perception that Britain is no longer a friendly environment for enterprise and capital.
Nigel Green warns that if the chancellor proceeds with this measure, it will deepen that perception and deter investment from overseas.
“Investors and business leaders are already viewing the UK with increasing caution,” he notes.
“They’re redirecting capital to economies that reward ambition and provide stability. Britain should be working to attract international wealth, not signalling that it intends to penalise it.”
He adds that the timing could hardly be worse, with the economy already weighed down by weak business investment and declining consumer confidence.
“As the Budget looms, the UK faces one of the steepest tax increases in modern history. Reeves is on course to raise taxes faster than any of her predecessors in 55 years.
“That alone would spook global capital, but combining it with an exit charge would send a message that Britain has given up competing,” he says.
“The result would be a sustained erosion of confidence and a steady relocation of capital to rival jurisdictions.”
The UK’s fiscal direction in recent years has already caused internationally-minded individuals to question whether the country remains a competitive place to do business.
“The abolition of the non-dom regime, rising corporate taxes and the highest personal tax burden in decades have all eroded confidence. An exit tax would be the final signal that the UK is no longer open to wealth, investment or aspiration,” he says.
“The chancellor should be working to attract entrepreneurs and innovators, not creating new obstacles. Prosperous economies are built on encouraging growth, not constraining ambition. Imposing a departure charge is the economics of retreat.”
He warns that while an exit tax might look politically expedient, it would deliver a false sense of progress. “The government will claim it is making the system fairer. In reality, it would reduce overall revenue by pushing investment offshore.
“Once wealth and business ownership are gone, they rarely return.”
“Other financial centres are already benefitting from the UK’s self-inflicted policy drift. Dubai, Singapore and other dynamic economies are attracting entrepreneurs who once saw Britain as the best base for global business.
“The country can’t afford to keep exporting its most productive citizens,” he adds.
The deVere CEO also highlights the immediate implications for internationally mobile individuals and entrepreneurs.
“This proposal adds urgency for them to review their residency status, succession plans and cross-border asset structures.
“Those with global interests need to act early and seek expert advice before further restrictions or taxes are imposed.”
He concludes: “The chancellor risks overseeing a historic loss of wealth, talent and confidence.
“Instead of chasing those who decide, as is their right, they want to leave, the focus should be on persuading more to invest and ensuring that Britain remains a place where ambition and enterprise are rewarded, not punished.”