Chancellor Rachel Reeves’s reported plan to impose a 20% ‘exit tax’ on wealthy individuals leaving the UK has been met with fierce opposition from business leaders and the wealth management industry, who have branded it “reckless and self-defeating”.
Reeves is understood to be considering the “settling-up charge” on business assets left in the UK as part of this month’s Budget, as she attempts to fill a multibillion-pound hole in the nation’s finances.
The move could reportedly generate £2bn for the Treasury.
The Times has reported that about 150 business leaders have already urged the chancellor to reconsider the plans, warning the charge would push vital investment away from Britain.
The proposal was denounced by Nigel Green, CEO of deVere Group, who warned the policy would “inflict lasting damage on the country’s competitiveness”.
“The government seems determined to make the UK an increasingly unattractive place for wealth creators,” Green said.
“The introduction of an exit tax would accelerate the exodus of entrepreneurs, business owners and investors who already feel punished for their success.”
The plan also drew sharp criticism from the Conservative benches.
Shadow Justice Secretary Robert Jenrick hit out at what he called a “crazy” idea that would “just see wealth and wealth creators sprint for the door”.
Industry experts echoed the concerns, warning that even the discussion of such a tax could have an immediate negative impact.
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Commenting, Marc Acheson, global wealth specialist at Utmost Wealth Solutions, said: “Such a measure risks further eroding the UK’s attractiveness to entrepreneurs and the global wealth community.
“Even talk of it could prompt behavioural responses and encourage entrepreneurs and wealthy people to try to leave in advance of it potentially being applied.
“With the country’s highest taxpayers making an outsized contribution to tax revenues, any further loss of this community could likely reduce the overall tax take.”
The proposal comes as the chancellor faces mounting pressure ahead of her Budget.
Economists have repeatedly warned that a combination of Labour U-turns, higher borrowing and sluggish economic growth means Reeves must either raise taxes or tear up her flagship borrowing rules.
Reeves herself has previously said that higher taxes on the wealthy will be “part of the story” of her highly anticipated Budget.
Nigel Green of deVere warned that the move would destroy confidence and placed it in the context of other recent revenue-raising measures.
“The abolition of the non-dom regime, rising corporate taxes and the highest personal tax burden in decades have all eroded confidence,” he said.
“An exit tax would be the final signal that the UK is no longer open to wealth, investment or aspiration.
“Investors and business leaders are already viewing the UK with increasing caution. They’re redirecting capital to economies that reward ambition and provide stability.”
For internationally mobile clients, Green warned the proposal creates immediate uncertainty and a need for action.
“This proposal adds urgency for them to review their residency status, succession plans and cross-border asset structures,” he added.
“Those with global interests need to act early and seek expert advice before further restrictions or taxes are imposed.”
