Rachel Reeves considering ‘exit tax’ on wealthy Brits fleeing the UK
Rachel Reeves is looking at a tax on wealthy Brits leaving the UK and a mansion tax, as last ditch levers to pull ahead of the Budget.
The Times reported on a possible 20 per cent “settling-up charge” on business assets, which is the rate of Capital Gains Tax (CGT).
It is thought that the policy would raise around £2bn, with the Chancellor facing a fiscal black hole of up to £35bn to fill at the 26 November Budget.
Speculation is mounting that Reeves will have to renege on one or other of the Labour manifesto promises not to raise flagship personal taxes and not to break her fiscal rules on borrowing.
Under the current regime, CGT does not apply to those selling their assets when leaving the country. The UK and Italy are outliers in the G7 for not having an exit tax.
According to Bloomberg, the Chancellor will only make the final decision on which taxes are being hiked once she is given the final forecast by the Office for Budget Responsibility (OBR).
Capital Economics has said that Rachel Reeves is hiking taxes faster than any Chancellor since the 1970s, with as much as £38bn on the cards in the November Budget alongside the £41.5bn from her first Budget.
Rachel Reeves exit tax to drive wealth exodus
But the rumours have sparked intense opposition, with warnings that advance notice of the levy might accelerate the wealth exodus from the UK.
Conservative shadow justice secretary Robert Jenrick said: “This would just see wealth and wealth creators sprint for the door. Crazy.
“We need more entrepreneurs, not fewer! Reeves must rule out this latest desperate move.”
Tax Policy Associates chief Dan Neidle posted on X: “If I was a Government thinking about introducing an exit tax, the *last* thing I’d do is give any hint that’s what I was about to do. Or people will leave to pre-empt it.”
Meanwhile, Reform UK is set to host a press event today in which Nigel Farage is expected to temper expectations from the party’s 2024 manifesto of tens of billions worth of tax cuts.
Reform-run Kent County Council has come under fire for hiking taxes after less than six months after taking charge.