Rachel Reeves Eyes 20% Tax on Assets for UK Departures

Published: 02 November 2025. The English Chronicle Desk. The English Chronicle Online.

The UK government is reportedly exploring plans to impose a 20% tax on the business assets of wealthy individuals who decide to leave the country, in an effort to align the nation with tax policies in other G7 economies and potentially raise substantial revenue for public coffers. Chancellor Rachel Reeves is said to be considering a “settling-up charge,” a levy on assets held in the UK at the point of departure, which could generate an estimated £2 billion if implemented.

While expatriates in the UK already face capital gains tax on property and land valued at £6,000 or more, certain other assets, such as shares in UK companies, currently enjoy a degree of tax exemption when sold after leaving the country. The proposed measure would extend the tax net to cover such assets, ensuring that those relocating abroad contribute a share to the Treasury proportional to their UK holdings.

A government source emphasised that the settling-up charge is still under discussion, forming one of several options the Treasury is evaluating ahead of the next budget. “No final decisions have been made,” the official stressed. However, experts have noted that the UK is somewhat of an outlier among major economies in not having a comprehensive exit tax regime, which has prompted policymakers to examine the proposal.

James Smith, research director at the Resolution Foundation thinktank, said the policy would target individuals relocating to low-tax jurisdictions, such as Dubai, who might otherwise avoid paying capital gains tax on UK-based assets. “At present, someone who moves abroad can sell their UK investments after departure without paying UK tax,” he explained. “A 20% exit charge would ensure fairness and discourage tax avoidance through relocation.”

The timing of such a policy, Smith added, is critical. “If the government announces a tax and delays its introduction, there is a risk of accelerated capital flight, as wealthy individuals could attempt to divest assets before the measure takes effect. But there are mechanisms that could allow immediate implementation to mitigate this risk.”

Under the reported plans, the settling-up charge could be structured to give departing residents flexibility in payment. Individuals who do not wish to liquidate assets immediately could defer the tax liability for a number of years, allowing them to manage their portfolios without sudden financial disruption. This deferred payment option is seen as a way to balance fairness with practicality, particularly for business owners and investors with long-term holdings.

The Times reported that the measure would likely be paired with a policy to exempt capital gains on investments made before an individual’s arrival in the UK. By ensuring that profits accrued prior to relocation are not taxed retroactively, the government would create a “fair and symmetrical” framework that treats incoming and outgoing residents equitably. Tax analysts suggest that such an approach could also incentivise wealthy investors to consider moving to the UK, knowing that gains made elsewhere would not be penalised.

The proposed 20% charge is part of a broader review of the UK’s tax system and its competitiveness relative to other G7 nations. Countries including Germany, France, and Canada have exit taxes in place to ensure departing taxpayers contribute to national revenues on assets they continue to hold domestically. The UK’s lack of a similar framework has led to discussions about whether high-net-worth individuals are being allowed to avoid their fair share of tax through strategic relocation.

Critics of the plan have warned of potential unintended consequences. Some analysts argue that introducing such a levy could inadvertently accelerate the departure of wealthy residents if the measure is perceived as punitive or poorly timed. “The government must balance revenue-raising objectives with the risk of creating incentives for immediate exits,” one tax expert told The English Chronicle. “Clear communication and careful design will be essential to avoid capital flight while achieving fairness.”

Supporters of the measure, however, emphasise the need for equity. “Wealthy individuals benefit from UK infrastructure, legal protections, and public services,” said a commentator on fiscal policy. “Ensuring that those who choose to leave contribute a reasonable share to the public purse is both fair and consistent with practices in other advanced economies.”

The policy also highlights ongoing debates around the UK’s global competitiveness and tax strategy. In recent years, there has been growing concern that the country risks losing talent, business owners, and investors to jurisdictions with lower tax burdens. Introducing a structured exit charge, coupled with clear rules for incoming residents, could help establish a level playing field and reduce incentives for tax-driven relocation.

Treasury officials are reportedly weighing several variations of the settling-up charge. Options under discussion include whether the levy should be applied as a flat 20% rate on all qualifying assets or whether it should take into account factors such as the type of asset, length of UK residence, or previous tax contributions. Additional considerations include potential deferrals, instalment plans, and exemptions for certain types of businesses or retirement accounts.

Industry groups and small business advocates are closely monitoring developments, recognising that the implications could extend beyond ultra-wealthy individuals. For entrepreneurs with holdings in UK-based companies, an exit tax could influence decisions about succession planning, asset sales, or relocation strategies. Financial advisers are advising clients to review their portfolios carefully and anticipate potential policy shifts, even as no formal legislation has been tabled.

Observers also point to the wider political context. With debates ongoing around fiscal responsibility, public spending, and wealth inequality, the Treasury is seeking ways to bolster revenues without unduly burdening domestic taxpayers. Exit taxes are seen as a mechanism to capture contributions from those who have benefited from the UK economy but choose to reside elsewhere, thereby redistributing tax responsibilities in a manner consistent with principles of equity and fairness.

As the policy remains under consideration, officials have emphasised that public consultation and legal scrutiny will be part of the process. Tax law specialists expect detailed guidance to follow any announcement, ensuring clarity on asset valuation, reporting requirements, and compliance procedures. The government has also indicated that it aims to avoid retroactive enforcement, which could create uncertainty for existing residents planning to move abroad.

For now, the proposal represents a potential shift in the UK’s approach to wealth management and international mobility. While details remain fluid, the concept of a 20% “settling-up charge” reflects a broader ambition to modernise tax policy and align it with global standards. If enacted, it could provide a significant revenue boost to public finances while signalling to investors and expatriates that leaving the UK entails tangible fiscal obligations.

The coming weeks will be critical as the Treasury continues to model options and assess their implications. Stakeholders from the financial, business, and tax advisory sectors are preparing for the debate, while individuals with high-value UK assets are considering the potential impact on their long-term plans. With the Chancellor yet to confirm any final decisions, the proposal remains a talking point across media, industry, and political circles.