There is a risk that the UK government may try raise barriers to HNW people seeking to quit the country. The danger of such moves, or even speculation about them, is that this will deter such individuals from entering in the first place. This article examines what sort of "exit taxes" exist, how they work, and their impact.

There’s been a steady drumbeat of noise about how HNW and ultra-HNW people are leaving the UK or thinking of doing so. A few days ago, there were media reports that hedge fund billionaire Chris Rokos, the UK’s third richest man, plans to leave for Greece. Groups such as the Adam Smith Institute, for example, have tracked a trend of millionaires heading overseas. However, not all the movement is in one direction because there is also a counternarrative of affluent Americans, for example, looking to live in the UK and spend more time in the country. 

In the following article, Christopher Groves (partner) and Sophie Orbell (paralegal), of Withers, the law firm, Withers, examine the risk that the current UK government could introduce an “exit tax” to discourage an exodus. 

Whatever the political risks of such a measure it is important to consider what could happen (in the view of this news service, such a tax would be counterproductive in that it might scare away wealthy people seeking to live in the country). 

The editors are pleased to share these ideas; the usual editorial disclaimers apply. To comment, email tom.burroughes@wealthbriefing.com and amanda.cheesley@clearviewpublishing.com

With 28 October 2026 announced as the date for the first Budget of Andy Burnham's premiership, speculation is already growing as to what "Manchesterism" might mean for the UK's tax system. 

There is no single model for an exit tax. Some countries impose a deemed disposal of assets on departure, others target only specific assets, while the US combines a citizenship-based taxation with a separate expatriation regime. The UK does not impose an exit tax on individuals, but it does on trusts and companies. 

The basic mechanism
At its core, an exit tax is generally intended to protect a country's tax base where an individual has accumulated substantial unrealised gains while resident there but leaves before those gains are realised. 

For example, an entrepreneur might build up a valuable business while UK resident, then move to a lower-tax jurisdiction shortly before selling. Without specific rules, the UK could lose the ability to tax gains that largely accrued during the individual's period of UK residence. 

Comparative approaches

Deemed disposal on departure
Some jurisdictions treat individuals as disposing of assets at market value when they cease to be resident, even though no actual sale has occurred.  Importantly, these regimes may also rebase the cost of assets to market value when an individual becomes resident, so that only gains accruing during the period of residence are subject to the exit charge.

Canada is a clear example. On emigration, an individual is generally deemed to dispose of relevant property at fair market value and immediately reacquire it at that same value. Correspondingly, assets are rebased to market value on becoming Canadian resident, so that only Canadian-period gains are caught. Important exclusions include Canadian real property; certain business property connected with a Canadian permanent establishment (which remain taxable in Canada regardless) and various registered pension or savings arrangements.

Australia takes a similar approach. Ceasing Australian residence can trigger a deemed capital gains tax (CGT) event for assets that fall outside the continuing Australian tax net. Assets acquired before becoming an Australian resident are generally rebased to their market value at the date of arrival for CGT purposes. Taxable Australian property, including Australian real estate, generally remains taxable on an eventual disposal.

South Africa also generally deems an individual to dispose of worldwide assets on ceasing tax residence, while South African immovable property is excluded and remains within the South African tax net. On becoming South African tax resident, assets are generally rebased to market value, so that the exit charge applies only to gains arising during the period of South African residence.

Targeted charges on substantial holdings
Other jurisdictions focus on significant corporate or investment holdings. In France, an exit tax can apply as a deemed disposal where an individual has been French tax resident for at least six of the preceding ten years. It is limited to securities worth at least €800,000 ($928,800), in total, or representing at least half of the profits of a company. The regime can also apply to earn-out receivables and certain deferred gains. Notably, France does not rebase assets to market value on arrival; the charge applies to the full latent gain at departure, although a credit mechanism may apply to avoid double taxation. There is an automatic deferral for emigration within the European Union.

Germany principally targets substantial shareholders with a deemed disposal regime. Broadly, the regime applies where an individual has been subject to unlimited German tax liability for at least seven of the previous twelve years and has held, directly or indirectly, at least 1 per cent of a corporation. The tax also applies to holdings in investment funds with an acquisition cost of more than €500,000. Germany does not rebase assets to market value on arrival; the deemed disposal charge applies to the full unrealised gain at the date of departure. As in France, deferral is available but only for payment in seven annual interest free instalments (for which security must be given if moving outside the EU).

The Netherlands has a 5 per cent shareholding threshold, and pensions can also be taxed. Emigration is treated as a deemed disposal. The Netherlands does not rebase assets on arrival; however, a step-up in cost price may be available under applicable tax treaties to limit the charge to Dutch-period gains. The charge can be paid in interest free instalments over 12 years, or with interest in full after 12 years, in which case interest is payable.

Norway's exit tax can apply to gains on shares, fund interests and other financial assets exceeding NOK3 million ($320,000). Assets are generally rebased to market value on becoming Norwegian tax resident, so that only Norwegian-period gains are subject to the exit charge. Emigration outside the European Economic Area means that security must be provided for the exit tax liability. Norway also taxes dividends paid in the 12-year period.

Citizenship-based taxation and expatriation
The US is unusual because US citizens generally remain subject to US tax on worldwide income even while living abroad. 

Instead, the US has a deemed disposal regime for individuals giving up citizenship. The tax applies to individuals with a net worth above $2 million among other criteria. Most assets are subject to a mark-to-market regime under which assets are treated as sold at fair market value immediately before expatriation, subject to specific exclusions and special rules for pensions, deferred compensation and trusts. 

The UK's current position
The UK currently has no general exit tax for individuals.  Merely ceasing to be UK resident does not normally trigger tax on unrealised capital gains. 

However, important exceptions remain. Non-residents may continue to be taxed on disposals of UK land and certain assets connected with a UK branch or agency. 

The temporary non-residence rules are also important. Broadly, where an individual leaves the UK, realises certain gains while non-resident and resumes UK residence within the relevant period, those gains may become taxable in the year of return. The UK is therefore relatively benign for genuine permanent departures but less accommodating of "sell and come back" planning.  

What should I do about a potential exit tax?
For those concerned about the introduction of an exit tax in the UK there remains a limited time to act before the Budget. Indeed, there remains a window of opportunity for those taking up full-time employment abroad, or giving up their UK home entirely to cease to be tax resident in the UK before 28th October. This may not be sufficient to escape a new exit tax. It remains rare for governments to introduce truly retroactive legislation (to catch those who have already left) and the circumstances in which it can do so are governed by the Rees Rules, which govern retroactive tax legislation. These rules require there to be given in the House of Commons notice of the intention to legislate and any new rules only to take effect from the date of the warning. The announcement of an exit tax in October applying to individuals who had already ceased to be resident before that date would contravene those rules.  

It remains possible that anyone ceasing to be resident on or after 28 October could be caught by a new exit charge.  Indeed, were such a charge to be introduced it would almost certainly apply with immediate effect to avoid triggering a rush to the exits for those affected.

Is an exit tax likely?
Looking that the experience of other countries, if an exit tax is introduced, the most likely option would seem to be a relatively targeted measure, most likely applying to investment holdings (with UK real property remaining taxable here and pensions already having a restricted emigration regime).  

It is also likely that there would also be an opportunity to defer the tax payable as under other countries' regimes.  However, UK's lack of membership of any supranational communities makes a two-tier regime less likely, with the same rules applying regardless of the emigrant's new place of residence. The lack of rebasing on taking up residence in other European countries perhaps makes that unlikely in the UK.

But will there be an exit tax? Business logic would dictate against such a move - the moves of successive UK governments and in particular Rachel Reeves' first budget have made the UK increasingly unattractive to internationally mobile individuals. While an exit tax may seem superficially attractive in preserving tax revenues in respect of those already in the UK, it will only discourage those who might come. That should be enough to consign it to the dustbin of counter-productive tax policies. The logic of politics and the Treasury may dictate differently of course.