Chancellor, Rachel Reeves, has reportedly dropped plans to introduce an exit tax on the business assets of high net worth individuals (HNWI) leaving the UK.

According to reports in The Telegraph, Reeves has ruled out imposing a ‘settling-up charge’ that could have applied capital gains tax (CGT) to the holdings of wealthy people leaving the country, due to fears it would accelerate the departure of HNWIs.

The government had reportedly hoped to raise around £2bn for the Treasury through the introduction of an exit tax at the Budget later this month.

A government source told The Telegraph that an exit tax could result in the UK being perceived as “less welcoming” to entrepreneurs and global talent, and that was something the Chancellor did not want to do.

Around 150 business owners had previously written to the Chancellor urging her to reconsider any plans for an exit tax.

“While it may have appeared a politically palatable lever to pull and a measure that would have brought the UK in line with some other European countries, in reality the mere talk of it was prompting behavioural responses and encouraging wealthy people to expedite plans to leave in advance of it potentially being applied,” commented Utmost Wealth Solutions global wealth specialist, Marc Acheson.

“With the country’s top 1 per cent of taxpayers contributing to a third of all tax revenue, policymakers must work harder to stem the outflow of HNWs and entrepreneurs and get the UK back to becoming an attractive and competitive destination of wealth.”

Meanwhile, the Financial Times reported that Reeves had also abandoned plans to increase income tax over fears it could anger voters and Labour MPs.

There were rumours that the Chancellor was considering a 2p rise in income tax, which would have broken a manifesto pledge not to raise income tax on working people.

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