Overview:
- Capital gains tax has increased substantially in recent years with an almost 50 per cent rise between 2019-20 and 2023-24 in receipts, increasing from £9.8 billion to £14.5 billion.
- Calls have recently been made for the introduction of an exit tax. Generally, this applies to the realised gains of assets of an individual upon leaving a country and changing where they are resident.
- International experience shows the complexity of implementing an exit tax, with little consistency of rules and susceptibility to being changed regularly.
- Some British Overseas Territories and other tax havens would likely benefit from a UK exit tax, but this would be to the disadvantage of future foreign direct investment into the UK.
- The chancellor in the October 2024 budget should commit to not introducing an exit tax during the rest of this parliament and lay out plans to reduce taxes on capital.