What are the UK tax exit rules and consequences for emigrating in 2023-2025?
Executive summary
As of late 2025 the UK does not have a formal, long‑standing “exit tax” that treats all departing individuals as if they’d sold every asset on emigration; however, heavy debate through 2024–25 produced concrete proposals and modelling (a possible “settling‑up” charge around 20% was reported and Treasury modelling suggested it might raise about £2bn) and important rule changes for certain categories (notably tighter rules from April 2025 affecting long‑term residents and trust settlors) mean emigrants face shifting exposures and loss of UK reliefs [1] [2] [3] [4]. Available sources do not mention a unified statutory exit tax having been enacted in the Autumn Budget 2025 (reports say the CGT "exit tax" was widely rumoured but ultimately not announced) [5].
1. What exists today: no universal individual exit tax, but important existing traps
The UK currently lacks a broad, statutory exit tax that automatically crystallises unrealised gains on all departing individuals the way some countries do; non‑residency generally stops UK taxation on foreign income and gains but UK CGT already applies to disposals of UK land and property by non‑residents [1] [6]. Loss of UK tax reliefs and personal allowances on ceasing UK residency is a practical cost: non‑residents typically lose the personal allowance and other benefits unless treaty or specific statutory exceptions apply [4].
2. The 2024–25 debate and the 2025 proposals: why politicians and analysts focused on an “exit tax”
Academics and think‑tanks argued the UK was an outlier for not taxing emigrants’ accrued gains, calling for a rebasing‑on‑arrival / deemed‑disposal‑on‑departure model to protect the tax base; LSE/CenTax research highlighted that a small number of wealthy leavers account for most potential revenue and estimated material leakages when founders leave to low‑tax jurisdictions [7]. That research fed policy debate which, by 2025, saw the Chancellor weighing options including a 20% “settling‑up” charge modelled to raise roughly £2bn per year, according to press reporting and commentary [2] [8] [9].
3. What ministers actually did (Autumn Budget 2025) — rumours vs outcome
In the run‑up to the November 2025 Budget, numerous outlets reported a likely exit tax; legal and advisory firms published analyses of how a deemed disposal rule might work and sought details on scope, deferral options and treaty interactions [10] [11]. However, authoritative reporting summarising the Autumn Budget says the widely‑rumoured capital gains “exit tax” on individuals permanently leaving the UK was not announced in that Budget [5].
4. Concrete rule changes to watch: April 2025 and trust/settlor measures
Even without a full‑blown exit tax, targeted reforms took effect: from April 2025 new rules heightened exposure for “long‑term residents” ceasing to meet residency tests and tightened how trusts and settlors can be taxed on ceasing UK residence — advisers warned that certain long‑term residents or trust settlors could face deemed charges or limited reliefs and in some commentary figures of up to 6% exposure were cited for particular trust‑related rules [3] [4].
5. Practical consequences for would‑be emigrants: planning, timing and country choice
Tax advisers and firms urged careful timing and planning because a late announcement could trigger a rush to change residency before rules take effect; proposals under discussion could treat individuals as having disposed of assets at the end of their last UK year of residence, subjecting accrued gains to CGT unless exemptions, rebasing or deferral mechanisms are specified [12] [10]. Observers noted that much of any revenue would come from a very small number of wealthy leavers — policy design choices (thresholds, deferral, assets covered) therefore determine who is affected [2] [7].
6. Competing viewpoints: revenue protection vs capital flight and competitiveness
Proponents argue an exit charge aligns the UK with other G7 jurisdictions and prevents wealthy founders from accumulating untaxed gains then leaving; proponents cited potential yield and fairness [7] [2]. Critics — including wealth advisers and some commentators — warn a heavy, immediate charge risks accelerating departures and harming inward investment, while urging transitional reliefs, deferral options or minimum exemptions if any charge is introduced [13] [8].
7. What emigrants must do now: steps grounded in current rules
Practical steps remain clear from advisers and HMRC guidance: determine residence under the statutory residence test, file leave‑of‑UK forms (P85/SA109) where relevant, check whether you fall within temporary non‑resident rules or long‑term resident definitions, and seek cross‑border advice if you hold trusts, substantial shareholdings or UK property — these are the assets already most likely to trigger UK tax after emigration [14] [15] [4].
Limitations: this analysis uses the supplied reporting and advisory extracts; available sources do not mention a single, enacted statutory individual exit tax being implemented in the Autumn Budget 2025 and do not provide full legislative text or bespoke taxpayer outcomes — for personalised consequences you must consult a qualified tax adviser and the original statutory instruments cited by HMRC [5] [4].