Autumn Budget 2025: What could an “exit tax” mean for wealthy UK residents?

As speculation intensifies ahead of the Autumn Budget on 26 November, one proposal attracting significant attention is the potential introduction of a UK “exit tax” – a charge on individuals who leave the country while holding unrealised gains on business assets.

If implemented, this measure could mark a major shift in the UK’s approach to taxing internationally mobile individuals.

The proposed “exit tax” – also referred to as a “settling-up charge” – would impose a 20% levy on unrealised gains from UK business assets when an individual ceases to be UK tax resident. This would include shares in private companies and other financial instruments, even if they are not sold at the time of departure.

Currently, individuals who become non-resident can often avoid UK Capital Gains Tax (CGT) on assets acquired or held when they were UK resident, provided they dispose of assets after leaving (and remain abroad for at least five years). The new proposal seeks to close this gap and align the UK with other G7 countries, such as France, Germany, and Canada, which already impose exit taxes.

There would also be an expectation that those coming to the UK will have their assets ‘re-based’ on arrival for CGT purposes, to ensure any tax exposure is only on the growth in value accrued whilst UK tax resident. This is a common feature in those countries that have an exit tax. No detail has been provided on this at this stage.

Chancellor Rachel Reeves faces a £20 – £35 billion fiscal shortfall, and the exit tax is one of several measures under review to raise revenue without altering core income tax bands. Treasury estimates suggest the tax could generate up to £2 billion annually.

The move also follows broader reforms to the non-dom regime and growing concerns about “wealth flight” with reports suggesting that up to 16,500 millionaires may leave the UK this year.

The tax is expected to target high-net-worth individuals (HNWIs), particularly those relocating to low-tax jurisdictions. It would apply to gains accrued during periods of UK residence, with possible exemptions for gains made before arrival (this implies a ‘rebasing of assets on becoming UK tax resident). Deferred payment options may be available, but details remain unclear.

For those already considering a move abroad, timing is critical. Some advisers warn that if the tax is introduced with immediate effect, individuals may face significant liabilities unless they establish non-UK tax residence before Budget Day.

While the proposal aims to ensure fairness and protect the UK tax base, critics argue it could be counterproductive. Tax experts have raised concerns about enforcement complexity, valuation challenges, and potential breaches of international agreements such as the European Convention on Human Rights.

There’s also the risk of accelerating departures. If wealthy individuals rush to leave before the tax takes effect, the UK could lose more capital and investment than it gains.

If you’re considering relocating, it’s essential to seek professional advice. The UK’s statutory residence test is strict, and missteps could result in unintended tax consequences. Planning for split-year treatment or exploring jurisdictions with favourable tax treaties may offer some relief, but the window to act is narrowing.

As with all Budget speculation, it’s important not to make hasty decisions. The final details – if the exit tax is introduced at all – will only be confirmed on 26 November.