The damage from Reeves’s ‘exit tax’ idea has been done

It appears that Rachel Reeves has scrapped her plans for an ‘exit tax’ that would impose a huge levy on entrepreneurs leaving the UK – at least for now. But is anyone actually going to be fooled by that? Once the concept has been leaked, the only rational response is to get out while you still can. 

With less than two weeks left before the Budget, no one seems to have any idea what might be in it, including, slightly alarmingly, the Chancellor Rachel Reeves. The briefings change minute by minute. Even so, it appears that plans for an ‘exit tax’ have been quietly shelved.

The Treasury has worked out that it will be very difficult to collect, given that it will be very hard to identify what assets might be included, and what they might be worth. And it has figured out as well that it would make the UK one of the least attractive countries in the world to start a business, which hardly seems encouraging for growth or jobs. Indeed, we were already starting to see the impact it would have, with the news that one of Britain’s most successful young tech entrepreneurs, Herman Narula, was planning to leave for Dubai, and we can be sure that many more were planning to make the move as well. 

The trouble is, even if Reeves has dropped her plans for an exit tax, the damage has already been done. To start with, the Budget process is now so chaotic, it is hard to know whether the exit tax is going to be included in the package that is unveiled in a few weeks’ time or not. There have been so many reversals and U-turns that no one can have much confidence in anything that gets briefed by the Treasury any more.

Next, and more seriously, the fact remains that the Treasury was even prepared to consider such a levy. It might not happen this year, but it could still happen in 2026 or 2027, especially if more and more of the wealthy are getting out of the UK, and the Chancellor is struggling to raise cash. The only rational response is to leave the UK now. There is no point in leaving it until it is too late. The prospect of an ‘exit tax’ will have driven plenty of entrepreneurs out of the UK – and it will be too late to bring them back now.