Fact check: What is the UK 'exit charge' and who pays it when leaving the UK?

1. How big a tax bite are ministers talking about — and who would feel it most?

Chancellor Rachel Reeves has publicly considered a 20% “settling-up” or exit charge on business assets retained in the UK when wealthy residents emigrate, a move presented as bringing Britain into line with other G7 states and potentially raising about £2 billion. Analysts and campaigners framing the proposal highlight that a small group of ultra-wealthy leavers would account for the bulk of the revenue — one report estimated the top 10 wealthiest leavers could deliver roughly 73% of receipts — so the policy is explicitly targeted rather than universal. Supporters argue this is a fairness and revenue measure aimed at limiting tax-motivated emigration by entrepreneurs; opponents warn of deterrent effects on mobile talent and of complex valuation and enforcement challenges ^{[1] [4]}.

2. What does the current law actually impose when someone leaves the UK?

Under current UK rules there is no single, automatic individual exit tax that crystallises capital gains across all assets on departure; instead, emigrants face the loss of UK-specific reliefs and exemptions — such as the personal allowance, business asset disposal relief and other resident-based tax breaks — and they can be exposed to future UK tax liabilities or double taxation if assets remain in the UK or generate income. For trusts and certain long-term resident relationships, the Autumn Budget 2024 did introduce new exit-style inheritance tax charges that apply when settlors cease to be long-term residents, which is a narrower, already enacted measure distinct from a general CGT exit charge ^{[3] [2]}.

3. International comparisons and precedents that shape the debate

Countries such as Australia and Canada levy departure or deemed disposition charges that crystallise gains on deemed disposal at emigration; these models are cited as direct precedents for the UK debate and are used to argue that an exit charge is administratively feasible. Proponents say aligning with these systems would close a perceived loophole allowing large unrealised gains to escape UK taxation when wealthy residents depart. Critics point to differences in enforcement capacity, residence definitions and bilateral tax treaties that complicate direct transplant of foreign models; they also stress the reputational and behavioural consequences for attracting international talent and wealth ^{[4] [5]}.

4. Practical pain points: valuation, double taxation and planning opportunities

Implementing any exit charge raises technical challenges: how to value business assets, whether reliefs apply, and how to avoid double taxation with other jurisdictions. Advisers recommend forward-looking tax planning before departure because current rules already create “hidden” costs — the loss of reliefs can be as consequential as a one-off exit tax. Wealthy individuals often use residency timing, trusts restructuring, or bilateral treaty reliefs to mitigate liabilities, while governments consider anti-avoidance rules and withholding mechanisms to secure revenue. The presence of existing trust IHT exit measures shows Parliament’s appetite for targeted rules, but a broad CGT-style exit regime would be more complex to design and enforce ^{[3] [6] [5]}.

5. Politics, revenue forecasts and the trade-offs on offer

Proposals promise material revenue in headline terms, with estimates such as £2 billion reinforcing political momentum to act on perceived unfairness when large gains leave the tax net. The trade-off is between short-term receipts and potential longer-term effects on the UK’s attractiveness to globally mobile entrepreneurs and investors. Parties and stakeholders frame the issue through different lenses: advocates present fairness and fiscal sustainability arguments, while business groups warn of deterrence and administrative burdens. Any final policy will have to balance revenue ambitions with treaty obligations, enforcement practicality and the risk of prompting behavioural responses that could blunt projected yields ^{[1] [4] [2]}.