UK exit tax: What is it and is there one in the UK?

Planning on leaving the UK to live or work abroad? There’s a lot to think about, from the logistics of the move to sorting out your financial affairs.

A key thing you’ll need to get to grips with is your taxes. It’s crucial that you understand the financial implications of emigrating out of the UK, so the advice of a tax expert really will be invaluable.

In this guide, we’ll be taking a look at the UK exit tax - including whether there is one, how it works and any other tax implications you might need to know about.

This should help you prepare for your move (although remember that this is only information, not advice).

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What is an exit tax?

While it works differently in each country, an exit tax is usually a Capital Gains Tax (CGT) levied on individuals and/or businesses when permanently leaving a country.

CGT is essentially a tax on the profit you make when you sell an asset, such as property (real estate), investments or a business.

Some countries charge CGT as an exit tax in order to prevent or disincentivise something called ‘tax flight’. This is where an individual or business builds up considerable gains during their time in the UK and then emigrates to another country, where they may be able to sell their business or realise gains without paying CGT.

Countries such as Australia, Japan, Canada and the US all have exit taxes that work in this way. Let’s take a quick look:

• Australia - charges a CGT bill on individuals leaving the country and becoming a non-resident for tax purposes. All qualified unrealised capital gains built up while in Australia except for ‘taxable Australian property’ are covered under this tax.¹
• Japan - the exit tax in Japan applies to people leaving the country permanently, who’ve lived there for more than 5 years out of the last 10, and have assets worth 100 million JPY or more.²
• Canada - known as departure tax, this applies when you leave the country and become a non-resident for tax purposes. The individual is subject to a ‘deemed disposition’, which means they are considered to have sold all of their assets on the departure date. Real estate is exempt from the departure tax.³
• United States - the US exit tax applies to individuals who are renouncing their green card status or US citizenship. It targets worldwide income and assets owned on the day before leaving the country, and assets are treated as if they are being sold. The tax only applies to people with a net worth of $2 million+ or an annual net income tax liability of over $201,000 over the last five years.⁴

Does the UK have an exit tax?

No, the UK does not currently have a direct exit tax. In the past, this was likely due to free movement rules within the European Union, which would have made the tax hard to implement.

But now that the UK has left the EU, some experts argue that an exit tax should be introduced to prevent individuals and businesses from leaving without ‘paying the final bill on the way out’.⁵

While the UK doesn’t directly charge an exit tax, there are still a number of tax implications you need to know about when leaving the UK. We’ll look at these in brief next.

Tax implications when leaving the UK

You won’t have to pay a capital gains tax or other kind of exit tax when leaving the UK, but there are still some important tax considerations to bear in mind.

One of the most significant is the loss of certain tax reliefs and benefits. For example:⁶

• Personal allowance for income tax
• Business asset disposal relief
• Private residence relief
• Enterprise investment scheme (EIS) and seed enterprise investment scheme (SEIS) reliefs.
• Loss of other UK tax reliefs for businesses, along with affecting corporate residency status and dividend taxation for shareholding directors.

These are some of the key points on which you need to seek advice. It’s crucial to get professional tax advice tailored to your specific circumstances, to make sure you understand your obligations and can plan accordingly.

Moving abroad? Make sure you take Wise with you

If you’re planning to leave the UK and live or work abroad, you’re going to need a convenient, cost-effective way to manage your money.

The Wise account is the perfect solution for global expats, as it lets you hold and convert 40+ currencies all in one place. It's not a bank account but offers some similar features and your money is safeguarded. You can manage everything online, or on the handy Wise app - ideal if you’re on the move.

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After reading this, you should have a better idea of what exit taxes are and how they work.

There isn’t a direct UK exit tax at the moment, but this may change in the future. You should also seek professional tax advice to understand any other tax implications of leaving the UK permanently.

Sources used for this article:

Sources checked on 26-May-2025