UK Chancellor Rachel Reeves has reportedly abandoned plans to impose a new “exit tax” on entrepreneurs moving their business out of the country, after accepting that it could lead to an exodus of millionaires.
Startup Coalition executive director Dom Hallas said over LinkedIn that the government had confirmed to him that the policy had been scrapped.
Reeves was reportedly hoping to raise £2bn from the proposal as part of a plan to plug a £30bn hole in public finances, but she has now backed down.
It came after a letter signed by 150 figures from tech startups, organised by the Startup Coalition, urged the Chancellor not to include the exit tax in the Budget, claiming that it would “not only tell founders that their ideas and innovations aren’t welcome, but that they should either get out early or not come at all”.
Several major Budget plans have reportedly been ditched this week, including speculated increases to income tax, following backlash in the media and from the public. It leaves unanswered questions as to how the Chancellor will raise the funds needed to balance the books.
Marc Acheson, global wealth specialist at Utmost Wealth Solutions, said: “While it may have appeared a politically palatable lever to pull and a measure that would have brought the UK in line with some other European countries, in reality, the mere talk of it was prompting behavioural responses and encouraging wealthy people to expedite plans to leave in advance of it potentially being applied.
“With the country’s top 1% of taxpayers contributing to a third of all tax revenue, policymakers must work harder to stem the outflow of high-net-worths and entrepreneurs and get the UK back to becoming an attractive and competitive destination of wealth.”
A HM Treasury spokesperson said: “We do not comment on speculation around changes to tax outside of fiscal events.”
