Leaving Britain? Why the UK Is Weighing an Exit Tax and Why It Matters

27th January 2026

For decades, leaving the UK has been a personal decision, not a taxable event. You could pack up, change your tax residence, and—beyond some routine HMRC paperwork—walk away without paying a special charge simply for going. That long-standing assumption may soon be tested.

The UK government is actively considering the introduction of an "exit tax" on people who leave the country, aimed primarily at the wealthy. While no such tax is yet law, the debate marks a significant shift in how Britain thinks about tax, mobility and fairness in an era of tight public finances.

What is an exit tax?

An exit tax (sometimes described by ministers as a "settling-up charge") would apply when an individual ceases to be UK tax-resident. Rather than waiting until assets are sold, the state would tax certain unrealised gains—for example, the increase in value of shares, businesses or investments built up while someone lived in the UK.

In effect, the government would be saying: if the wealth was created here, some tax should be paid here before you go.

The current legal position

As things stand, the UK does not have a general exit tax. People who move abroad are not automatically taxed on the paper gains of their assets just because they leave. There are anti-avoidance rules—such as charges if you return within a short period after selling assets—but no blanket departure levy.

That puts the UK at odds with several other advanced economies. Countries including the United States, Canada, Germany and France already impose some form of exit tax on emigrants, particularly those with substantial wealth.

What is being proposed?

Reports suggest the Treasury is exploring a charge of around 20% on certain assets held by wealthy individuals when they leave the UK. The focus is firmly on high-net-worth individuals, entrepreneurs and major investors, not ordinary workers emigrating for a job or retirement.

Media estimates indicate such a tax could raise around £2 billion, helping to shore up public finances without increasing taxes on those who stay. Supporters argue it would close an obvious loophole: people building large fortunes in the UK and then relocating to avoid UK capital gains tax altogether.

Why now?

The timing is not accidental. Britain is under sustained fiscal pressure, with limited room to raise income tax or VAT. At the same time, the government is keen to demonstrate that it is tackling perceived unfairness in the tax system.

An exit tax fits that narrative neatly. It targets a relatively small, politically sensitive group and can be framed as aligning the UK with international norms rather than introducing a radical new idea.

The controversy

Critics warn the policy could backfire. Business groups argue that even the threat of an exit tax may discourage entrepreneurs and internationally mobile talent from basing themselves in the UK in the first place. Others raise practical concerns: valuing private businesses and illiquid assets at the moment of departure is complex and ripe for dispute.

There are also broader questions of principle. Should the state have a claim on wealth that has not yet been realised? And does taxing people as they leave undermine the UK's reputation as an open, globally connected economy?

So, will it happen?

For now, there is no exit tax in force. Any change would require legislation, most likely announced in a future Budget and passed through a Finance Bill. That process would also determine key details: thresholds, exemptions, payment terms, and protections against double taxation.

But the direction of travel is clear. The idea has moved from the margins into mainstream fiscal debate.

If you are an ordinary person moving abroad, nothing changes—for now. But for wealthy individuals and business owners, the UK is signalling a new principle: leaving the country may no longer mean leaving the tax system behind.

Whether an exit tax ultimately raises revenue or simply drives behaviour will depend on how—and whether—it is implemented. One thing is certain: the era when departure was tax-neutral may be coming to an end.