Prospect of ‘Exit Tax’ highlights the importance of accelerating your exit planning
As speculation grows ahead of November's UK Budget, talk of a potential “exit tax” has once again resurfaced. The concept has been discussed periodically over recent years but gained fresh momentum in 2025 following renewed debate about how the government can retain taxable wealth as global mobility increases.
Although there is no formal proposal currently on the table, even the possibility of such a measure is enough to warrant close attention. For individuals considering a move abroad, or those already preparing to change tax residency, the timing of any relocation and the sequencing of asset disposals may prove crucial.
The discussion itself highlights a broader truth: effective exit planning is best done proactively, not reactively.
What an Exit Tax Actually Means
An exit tax is a tax imposed on unrealised capital gains when an individual changes tax residence. In simple terms, it treats the act of leaving as though certain assets were sold at their market value immediately before departure.
This approach is already in place in several countries. France applies an exit charge to significant shareholdings when an individual emigrates. The Netherlands has similar provisions for those who hold substantial business or investment interests. Canada uses a “deemed disposition” rule for many capital assets when an individual ceases to be resident.
Such a measure, if introduced in the UK, would likely target high-value portfolios, business owners, and those with considerable unrealised capital appreciation.
Where the UK Stands Today
At present, the UK does not have an exit tax on individuals. However, elements of the tax system already operate in a similar spirit.
The temporary non-residence rules can bring certain gains back into charge if the individual returns within a specified period. There are exit charges on trusts, and various reliefs can be lost or clawed back depending on the timing of a move. These include Business Asset Disposal Relief, Private Residence Relief, and the tax benefits associated with Enterprise Investment Schemes and Seed Enterprise Investment Schemes.
If the government were to align capital gains tax rates more closely with income tax rates, as some commentators have suggested might happen, any future exit measure could compound the overall exposure. For high-net-worth individuals, these factors create a clear incentive to review their position early. The absence of certainty does not mean the absence of risk. This uncertainty has kept the topic of an ‘exit tax’ alive among policymakers and think tanks.
‘The Resolution Foundation' think tank (whose CEO in 2024 was Torsten Bell, now a Labour MP) has proposed that an ‘exit tax’ should be introduced to stem the anticipated exodus of High Net Worth (HNW) and Ultra High Net Worth (UHNW) individuals and business owners over the next four years, with wealth migration research¹ forecasting that 490,000 millionaires will leave the UK by 2028 driven by the prospect of higher UK Capital Gains Tax (CGT) rates.
While this remains a policy proposal rather than a confirmed measure, it highlights how serious the conversation around wealth mobility and taxation has become.
Why It Matters Even Before Legislation
For many clients, the issue is not whether an exit tax will be introduced, but whether they will be prepared if it does. Waiting for confirmation can narrow the window for effective planning.
Tax changes that apply from a set date often catch individuals off guard, particularly if valuations or disposals cannot be arranged in time. By contrast, those who act early can set clear baselines, determine the cost of exit under various scenarios, and decide whether to crystallise certain gains in advance.
In other words, even the possibility of an exit tax can create planning risk. Acting sooner provides optionality, and optionality is one of the most valuable forms of protection available.
Global Trend: Wealth Mobility Under Scrutiny
The UK debate is part of a wider international shift. Across Europe, governments are re-evaluating residency incentives, special tax regimes, and exit provisions as they balance fiscal pressures with competitiveness.
Portugal has closed its Non-Habitual Resident regime to new entrants and tightened access for those in transition. Greece has increased minimum investment thresholds for its residency programmes. Italy has reviewed the future of its flat-tax regime for new residents and imposed stricter reporting requirements.
Together these developments signal a changing climate. Tax authorities are watching the movement of people and capital more closely, and there is growing political policy focus on ensuring that mobile wealth contributes to domestic revenues.
For British expatriates, this means that exit and entry planning must now be viewed as two sides of the same coin. How one leaves the UK and how one arrives in the destination country should be coordinated as a single, coherent strategy.
So how can you prepare amid this shifting landscape?
Practical Steps: Accelerating Your Exit Planning
Effective exit planning involves more than picking a departure date. It requires a sequence of decisions that align personal objectives, asset structures, and timing. The process can take many months to implement fully, so beginning early is essential.
1. Review residency and domicile status
Confirm your current position under UK rules and determine how and when a change of residence could take effect.
2. Map and value assets
Identify which holdings have significant unrealised gains and consider whether to realise, restructure, or hold them. Understanding your exposure is the foundation of all planning.
3. Re-evaluate trust and company structures
Consider how trust exit provisions or distributions could interact with future policy changes. Make sure control and beneficiary arrangements are still appropriate.
4. Plan major disposals and timing
If you expect to sell assets, consider whether to do so before or after your move, taking into account currency, market conditions, and tax implications in both jurisdictions.
5. Maintain sufficient liquidity
Ensure you can meet potential tax liabilities or restructuring costs without being forced to sell long-term holdings at the wrong time.
6. Coordinate with an advisor who understands the tax systems in both countries
Align UK exit planning with entry requirements in your destination. Understanding the interplay between the two systems can help avoid double taxation or missed reliefs.
Planning is best done proactively, not reactively
The UK does not currently impose an exit tax on individuals, but the debate is active and ongoing. Even the discussion of such a measure reflects a broader policy environment that is more focused on the taxation of mobility and wealth.
For those contemplating a relocation, waiting for absolute certainty can mean losing control of the timing. Taking early, well-structured steps now provide flexibility regardless of what the government ultimately decides.
Planning ahead is not about predicting the future; it is about preparing for it.
Speak with us to explore your options
As the Budget draws closer, now is the time to explore your options.
If you are thinking about your business exit or re-locating from the UK, contact us today or email us at [email protected] to schedule an initial consultation.
Mark Routen
Chartered Tax Advisor
As Forth Capital's Head of Tax, I offer tailored tax planning advice to high net worth international private clients. I help them understand their options, optimise their cross-border arrangements, and create a robust plan for their future.
Frequency Asked Questions
No. There is no formal proposal or draft legislation at present. However, several think tanks and media reports have indicated that the concept is under active consideration.
Temporary non-residence rules apply to gains that are actually realised within a certain period after leaving, if the person later returns to the UK. An exit tax would be broader, potentially charging tax on unrealised gains at the moment of departure.
That would depend on how any future legislation is drafted. Most existing international examples focus on shareholdings and investment assets. Whether UK-specific wrappers such as ISAs or pensions would be included is unknown.
France, the Netherlands, and Canada each apply a form of exit taxation. Their regimes differ in scope but share the principle of taxing accrued gains when residency changes.
Begin by confirming your current tax residence status, review your portfolio for latent gains, and consult advisors in both jurisdictions. Early preparation will give you the broadest range of choices and the least disruption if new rules are announced.
¹ Source – Henley Private Wealth Migration Report 2024
This content is for general information only and does not constitute financial, legal, or tax advice. It reflects UK legislation and publicly available policy discussions at the time of writing, which may change. Tax and pension rules vary by jurisdiction and depend on individual circumstances. Examples are illustrative and not a guarantee of outcomes. The value of investments can go down as well as up, and you may not get back the amount originally invested. Double taxation relief and residency status depend on personal situations and local tax authority interpretation. You should seek professional advice before making any financial or relocation decisions.
Last updated 24 October 2025
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