More freelancers than expected could get trapped by “wealthy” exit fees when all their assets are considered
As the UK government grapples with budget shortfalls, recent proposals to introduce exit fees targeting wealthy individuals leaving the country have sparked heated debate. Freelancers and contractors who thrive in an increasingly globalised marketplace and own a property valued at £1m in addition to investments and pensions could potentially fall within the parameters of what the government considers “wealthy”.
While no formal legislation has been introduced, discussions on imposing taxes on individuals as they relocate abroad are gaining momentum, with potential implications that could extend beyond the ultra-wealthy.
In this article, we consider the key points of these exit fee proposals and why freelancers need to keep on top of any policy changes that could impact their way of life should they choose to move and work abroad.
What are the proposed exit fees?
Exit fees, though not yet legislated in the UK, are intended to target individuals who might relocate to avoid paying higher taxes. Discussions, primarily led by left-leaning political groups, focus on ensuring that the wealthiest 1% to 5% continue to contribute their share to the UK economy, even after moving overseas.
Although specific thresholds haven’t been established, it’s widely speculated that individuals with incomes above £100,000 or net worths of over £1 million could be affected. Those with a net worth exceeding £3-5 million might face even steeper charges. The proposed fees would likely apply to capital gains on property, investments, and other assets that have appreciated in value.
The intent is clear: to curb tax avoidance by wealthy residents leaving the UK for more tax-friendly destinations. Proponents argue that, as wealth inequality grows, the burden must remain on those with substantial assets.
Experts warn of economic impacts of exit fees
While the goal of ensuring fairness in the tax system sounds appealing, critics warn that such policies could have unintended consequences. Nigel Green, CEO of deVere Group, has been particularly vocal in his opposition to the proposed exit tax. According to Green, the policy could have long-term negative effects on the UK’s economy.
“While this may sound like a quick fix to help close a £22 billion budget gap,” Green explains, “the proposal not only falls short of addressing the core issues but risks pushing the UK into an economic trap that will have long-term consequences.”
His central concern is that an exit fee would discourage wealthy individuals, businesses, and investors from establishing or maintaining a presence in the UK. For a country that relies heavily on entrepreneurs, innovators, and wealth creators to drive economic growth, this could be a significant blow.
“The proponents of the exit tax are missing the point. At a time when economic growth needs a boost, and international competition for talent and capital is fierce, this tax would do more harm than good,” Green warns.
Discouraging talent and investment: it’s a global problem
For freelancers and contractors who operate internationally, Green’s argument should resonate. The world is more connected than ever, and global talent is mobile. If wealthy individuals, who also happen to be major investors in critical sectors like real estate, technology, and startups, feel unwelcome in the UK, they may look to countries like Switzerland, Singapore, or Dubai, where taxes are lower, and the business climate more welcoming.
“Wealth is mobile,” Green notes, “and individuals and businesses will relocate if they feel overburdened or unwelcome.”
In a global economy, wealth creators—whether they are tech entrepreneurs or independent contractors managing successful consulting firms—will seek out environments where they feel encouraged to thrive, rather than punished.
Hidden costs and the risk of talent drain
One of the biggest risks of an exit tax is a potential “talent drain”—where not only wealthy individuals, but also skilled professionals, entrepreneurs, and businesses leave the UK for more favourable conditions. This would be especially harmful to sectors that rely on high-net-worth individuals as both clients and investors.
For freelancers who work across borders, the diminished business opportunities from a shrinking wealthy client base could spell trouble. “This would result in a loss far exceeding the projected £500 million in annual revenue,” Green states. “The true cost would be a diminished tax-paying workforce, fewer investments, and ultimately, a less competitive UK.”
Rather than plugging short-term budget holes, these policies could undermine the very sectors that drive the UK’s long-term growth and economic stability.
Should Labour be promoting wealth creation or just taxing it?
Green offers an alternative approach that should appeal to freelancers and contractors who depend on a thriving, dynamic economy. Rather than imposing punitive taxes, Green believes the UK government should focus on policies that promote wealth creation and make the country attractive to global talent.
“The government should be focusing on policies that encourage wealth creation and attract global talent,” he urges. Green suggests that simplifying the tax code, improving infrastructure, and reducing regulatory barriers could foster a more business-friendly environment.
For those working independently, these kinds of pro-business policies would likely create more opportunities, attract more clients, and make the UK a competitive place for innovators and wealth creators.
Freelancers must not be complacent about political policies
As the debate on exit fees for the wealthy continues, freelancers and contractors should keep a close eye on developments. While these taxes may initially seem like they only affect the ultra-rich, their ripple effects could harm the broader economy and affect independent professionals.
“The exit tax is a misguided proposal that may deliver short-term revenue but at the cost of long-term economic growth and competitiveness,” Green concludes.
For freelancers, the message is clear: the focus should be on building a vibrant economy where talent, investment, and innovation are encouraged—not penalised.
As the UK looks for ways to address its budget deficit, the government’s decisions could have lasting effects on the business landscape. Policies that alienate wealth creators and global talent may ultimately cost more than they bring in.
For freelancers, the takeaway is simple: watch the trends and be ready to adapt to a changing economic climate.
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