UK Considers 20% Exit Tax on HNWIs as Budget Tightens

The UK government is weighing the introduction of a 20% “exit tax” on unrealized capital gains for individuals relocating abroad, signaling a sharper fiscal stance ahead of the November 26 Budget.

If implemented, the measure would tax gains in assets such as shares and bonds at the point of departure.

Early estimates suggest it could generate around £2 billion annually, forming part of broader efforts to address a potential £20 billion fiscal shortfall.

Currently, non-residents are only taxed on UK property and land, leaving other assets exempt once they leave the country.

Proposed Exit Tax Framework

The proposal, informally known as a “settling-up charge,” would:

• Apply a 20% tax on unrealized gains at the time of exit.
• Allow taxpayers to defer payment over several years.
• Exempt gains accrued before becoming UK residents.
• Take effect either immediately after the November 26 announcement or from the next tax year in April 2026.

The Treasury has confirmed that multiple versions of the measure are under review, though final decisions have yet to be made.

Market and Mobility Implications

Analysts warn that an exit charge could trigger capital flight among high-net-worth individuals and discourage future relocation to the UK.

Following the recent abolition of the non-domiciled regime, many affluent residents have already moved their assets overseas, and a new exit tax could accelerate that trend.

Experts also caution that such policies could weaken the UK’s global appeal as a flexible and investment-friendly destination, potentially impacting long-term competitiveness.

Next Steps

If approved, the new tax would align the UK with other OECD nations that impose departure-based capital gains taxes, but it would represent a major policy shift for Britain.

The proposal is expected to be legislated as part of the 2025 Budget package, with an implementation timeline dependent on the outcome of fiscal negotiations in late November.