Chancellor Rachel Reeves’ reported plan to impose a 20% “withdrawal tax” on the business assets of wealthy individuals leaving the UK has sparked a fierce backlash in the financial sector. Critics warn that this could deter entrepreneurs and investors.
The proposed measure – called a “settlement fee” – would impose a capital gains tax on the holdings of those who move to low-tax jurisdictions. Financial insiders reportedly believe this could generate around £2 billion in additional revenue.
But Nigel Green, CEO of deVere Group, one of the world’s largest independent financial advisory and wealth management firms, called the proposal “reckless and self-defeating.”
“The government appears determined to make the UK an increasingly unattractive place for wealth creators,” Green said. “The introduction of an exit tax would accelerate the exodus of entrepreneurs, business owners and investors who already feel penalized for their success.”
Green warned the policy would hurt Britain’s competitiveness at a critical moment and could cost the Treasury more than it earns.
“This policy would not only result in no meaningful revenue generation; it would destroy confidence, reduce investment and ultimately cost the Treasury far more in lost economic activity than it could ever recoup through short-term taxation,” he said.
The firm has already seen a sharp increase in high net worth individuals reassessing their exposure to the UK, he added, amid fears the country is no longer business and business friendly.
“Investors and business leaders are already viewing Britain with increasing caution. They are redirecting capital to economies that reward ambition and provide stability. Britain should work to attract international wealth, not signal that it wants to punish it.”
Reeves’ budget, expected later this month, comes as the UK faces slowing growth, weak business investment and falling consumer confidence. Analysts have warned that the Chancellor will see the fastest tax rises in over half a century.
Green argued that adding an “exit fee” to the mix would send a damaging signal to global markets.
“That alone would spook global capital, but combining it with an exit fee would send the signal that Britain has given up competition,” he said. “The result would be a sustained loss of trust and a steady shift of capital to competing jurisdictions.”
The DeVere boss said the proposal reflects short-term, politically motivated thinking that risks jeopardizing long-term prosperity.
“The abolition of the non-dom regime, rising corporate taxes and the highest personal tax burden in decades have already undermined trust,” he said. “An exit tax would be the final signal that the UK is no longer open to wealth, investment or ambition.”
Green called on the Chancellor to focus on policies that attract innovators rather than penalizing success.
“Prosperous economies are based on promoting growth, not restricting ambition. Imposing an exit tax is the economics of withdrawal,” he said.
He added that while an exit tax may seem politically sensible, it poses a “historic loss of wealth, talent and trust” as capital moves to competing hubs such as Dubai, Singapore and Switzerland.
“Other financial centers are already benefiting from the UK’s self-inflicted policy divergence. The country cannot afford to continue exporting its most productive citizens,” he warned.
Green also warned internationally mobile individuals and business owners to review their residency and succession plans before enacting such a policy.
“This proposal increases the urgency for global business owners to seek expert advice before further restrictions or taxes are introduced,” he said.
He concluded: “Rather than preying on those who choose to leave – as is their right – the focus should be on getting more people to invest – ensuring Britain remains a place where ambition and enterprise are rewarded rather than punished.”
