Chancellor, Rachel Reeves, is reportedly considering the introduction of an exit tax on the business assets of high net worth individuals (HNWI) leaving the UK, with figures from the wealth industry warning against the move.

According to reports, Reeves is looking at plans to impose a ‘settling-up charge’ that could apply capital gains tax (CGT) to the holdings of wealthy people leaving the UK, which could raise around £2bn for the Treasury, in the Budget later this month.

The Times reported that around 150 business owners had written to Reeves urging her to reconsider the plans.

DeVere Group CEO, Nigel Green, warned that such a tax would be “reckless and self-defeating” and inflict “lasting damage” on the UK’s competitiveness.

“The introduction of an exit tax would accelerate the exodus of entrepreneurs, business owners and investors who already feel punished for their success,” Green stated.

“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.”

Utmost Wealth Solutions global wealth specialist, Marc Acheson, argued that the introduction of an exit tax risked 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,” Acheson said.

“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.”

DeVere Group said it had seen an increase in domestic and global investors rethinking their exposure to the UK due to a growing perception that the country was no longer a ‘friendly environment’ for enterprise and capital.

The firm warmed that, if the Chancellor did impose an exit tax, it would deepen that perception and deter investment from overseas.

“Investors and business leaders are already viewing the UK with increasing caution,” he said.

“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.”

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