UK government drops proposed exit tax after pushback from tech founders

The UK government drops a planned exit tax following strong opposition from the tech community, keeping the measure out of the upcoming Autumn Budget.

The UK’s proposed exit tax, which would have charged business owners moving their companies abroad, has been officially dropped from the upcoming Autumn Budget.

Chancellor Rachel Reeves has ruled out including the measure, following strong opposition from across the UK tech and startup community, reports UKTN.

The proposed “exit tax” aims to impose a 20 per cent levy on unrealised gains from UK business assets when an individual stops being a UK tax resident.

This tax would cover shares in private companies and other financial instruments, even if those assets are not sold at the time of departure.

There has been increased talk about a new tax that could help raise money without bringing back earlier rejected tax hikes.

Critics worry that this could harm the UK’s reputation as a place where entrepreneurs can grow their businesses globally.

1,500 founders, investors, and operators signed open letter

More than 1,500 founders, investors, and operators signed an open letter organised by the Startup Coalition, arguing the proposed policy would “tell founders that their ideas and innovations aren’t welcome”.

Prominent people, including Hussein Kanji, Harry Stebbings, Barney Hussey-Yeo, Alex Macdonald, Charles McManus, and Andrew Sheffield rallied behind the effort.

Startup Coalition executive director Dom Hallas said on LinkedIn that government sources had now confirmed the proposal would not appear in the 26 November budget.

According to Hallas, a source close to the Chancellor said: “This is a pro-business government which is building on the progress we’ve already made to strengthen the UK’s position as an attractive investment prospect for the best and the brightest across the world.”

“Introducing an exit charge would risk signalling that the UK is less welcoming to entrepreneurs and global talent, and that’s not something the Chancellor wants to do,” adds the spokesperson.

Hallas welcomed the reversal and praised the effort from the tech sector, emphasising that the decision was the direct result of coordinated pressure.

“This has only been possible because of the startup community uniting with a clear voice about how detrimental it would be to the UK. So thank you to everyone who has signed or shared our petition – every one of the 1500+ founders, investors and builders who signed on made the difference,” says Hallas in a LinkedIn post.

The UK’s Autumn Budget will be delivered on Wednesday, 26 November.