Chris Etherington, Tax Partner at RSM UK: “This Budget may break records for the sheer volume of ideas floated about potential tax changes, but one reported “leak” could prove to be expensive unless it is swiftly plugged.

“Rumours about the introduction of an exit charge for individuals leaving the UK have often circulated ahead of UK budgets. However, this has represented little more than idle speculation, with limited substance to the rumours and few acting in response.

“In contrast, the reports suggesting Rachel Reeves has been actively considering the introduction of a “settling up charge” for those becoming non-UK resident have been taken seriously, causing both concern and confusion amongst those it might impact.

“On one hand, it has served as a prompt to individuals who have already been considering a move overseas, or are generally more internationally mobile, to weigh up whether they should seek to leave the UK ahead of the budget.

“On the other, some are simply confused as to how specific details of such a policy could end up being widely reported in the media and what purpose that serves. Logic would suggest that even the suggestion of such a tax is likely to place an unnecessary seed of doubt in the minds of entrepreneurs and could distort behaviour.

“Some will assume that that an exit tax may now feature in a future budget of this government, and it will be a challenge to put this particular genie back in its bottle.

“It appears some effort has already been made in that respect. While no official comment has been made, an anonymous source “close to the Chancellor” has reportedly stated that an exit tax is “not something the Chancellor wants to do” on the basis it “would risk signalling that the UK is less welcoming to entrepreneurs and global talent.”

“That sentiment will be welcomed and shared by some entrepreneurs, but more action needs to be taken if the government wants to truly stem the flow of departures that this leak may inadvertently encourage.

“It’s not just the potential introduction of an exit tax that is giving rise to concerns, but also what might follow it in the future. The fear is that an effective locking of the exit doors to the UK may be a precursor to something more foreboding. The assumption of some is that the government might follow the recommendations of some economists to introduce an exit charge and in turn, increase capital gains tax rates.

“Many may feel exhausted, and exasperated, by the lead-up to this budget and an argument can be made for a stricter enforcement of the convention of “purdah”, in effect a vow of silence in relation to questions on potential fiscal plans. Applying this same standard, it would also be inappropriate for the Chancellor to comment on an exit tax ahead of the budget.

“However, swift action should be taken after budget day if an exit tax does not feature in the announcements and is not on the Chancellor’s longer-term agenda. Addressing the issue of an exit tax head-on, in a similar way to the Chancellor’s categorical views of a wealth tax, would help allay concerns and is realistically the most entrepreneurs can hope for. The question then would be whether the political or economic board is toppled over ahead of next year’s budget, putting all the pieces back in play.”

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