Plans to impose a hefty tax on wealthy foreign residents who leave Italy are a damaging own goal and have “spooked” Britons, experts say.

Rich Britons looking to escape taxes introduced by the Labour Government would be “jumping out of the frying pan and into the fire” if they moved to Italy, financial consultants warned.

Giorgia Meloni’s government won international plaudits for a flat-tax regime that lured thousands of wealthy foreigners to settle in Italy.

Milan in particular saw expats buying property, joining private clubs, spending in high-end restaurants and enrolling their children in expensive private schools.

But in a surprise move, the conservative coalition has proposed levying a 26 per cent capital gains tax on expatriates who, having settled in Italy, later decide to relocate.

The measure, announced in the country’s latest budget, would apply to foreigners with assets of €800,000 (£700,000) or more who have been tax residents in Italy for at least six of the 10 preceding years. Expats would want to escape the country before the six-year period was up, experts said.

The exit tax has “spooked” wealthy Britons who were planning to move to Italy, financial consultants told The Telegraph.

“It’s an odd thing to do. People will be watching the clock, making sure they stay for less than six years,” said Tim Stovold, head of tax at Moore Kingston Smith, a tax and advisory firm based in London.

“Normally these low tax regimes in countries like Italy, Spain and Portugal are designed to attract people to settle long term. They pump money into the economy.

“I have clients in Italy who buy property, embark on a restoration project and become the principal employers in the village. It’s a terrific benefit to the host country.”The Istituto Bruno Leoni, an Italian free-market think tank, said the government initiative was incomprehensible. It said the exit tax would bring in only modest revenue for the government but would dissuade wealthy foreigners from investing in Italy.

“On the one hand, we are trying to attract foreigners with the flat-tax regime. On the other hand, we are telling them once they settle, if they want to leave, they have to pay a disproportionate tax duty,” it added.

Italy’s flat-tax regime was introduced under a previous government in 2017. Initially, the annual flat tax to be paid by foreigners who relocated to Italy was €100,000. The Meloni government increased it to €200,000 and then to €300,000, in part to fill government funds and in part because of a backlash among Italians over rising property prices in cities such as Milan. Even with that increase, the deal remained appealing to many wealthy foreigners.

“If you sold your business for £20m, say, the arrangement remained attractive – you would only pay €300,000 in tax,” said Mr Stovold. “What will now trouble people who want to leave the UK tax regime is the question of whether it’s a case of ‘out of the frying pan and into the fire’.

“You would pay 24 per cent capital gains tax in the UK but now, in Italy, you will pay a 26 per cent exit tax. It appears to be an own goal, an act of self-harm, similar to when the UK abolished the non-domiciled regime.

“For people looking to leave the UK, I think this moves Italy a long way down the list of where they will want to go.”In April last year, the British Government decided to abolish the “non-dom” tax regime that exempted the overseas income of UK residents with a foreign domicile from taxation, including for inheritance purposes.

The Italian exit tax will be particularly problematic for parents, who will want to settle their children in school for more than six years.

“It will be a deterrent for people who were looking to leave the UK and live in Italy,” said Mr Stovold.

Wealthy foreigners who had moved to Italy had already been unsettled by the steep increase in the flat tax threshold, said Charlie Sosna, head of private wealth and tax at the law firm Mishcon de Reya.

“Those who have moved to Italy went with an element of hesitation over the stability of the tax regime and whether it would change, particularly when they doubled the flat fee cost overnight,” he said.

“The announcement of an exit tax is likely to cause considerable concern to those who have moved there. Italy would be wise to give clarity very soon as to the scope and, in particular, whether those under the flat fee regime [already] there will be excluded from it.”The proposed exit tax will damage Italy’s image as a haven for high-net-worth individuals, he said.

“This will have spooked them and clients are likely to wait and see how this develops and what it may mean for them,” said Mr Sosna. The proposed law is yet to be discussed in Italy’s parliament, and could still be subject to amendments.

“We don’t know all the details, but it seems that it will only apply to people whose residency in Italy begins after Jan 1, 2027,” said Mr Stovold. “So those who are already in the country are probably OK.”Ms Meloni, who was elected four years ago, has been credited with bringing a rare period of political and economic stability to Italy, which for decades was a byword for revolving-door prime ministers, high debt and unpredictability.

Before the exit tax was mooted, Henley & Partners, a British migration consultancy, described Italy as “a principal alternative destination within the European market for high-net-worth individuals and families seeking fiscal certainty combined with EU access”.

Asked about the impact of the proposed new wealth tax, the company said it would reserve judgment “until the legislation is finalised”. The implications of the new levy were still unclear, the firm said.

Ms Meloni, the longest-serving Italian prime minister since the Second World War, faces a general election next year. Opinion polls suggest that her governing coalition is running neck and neck with an alliance of centre-Left parties.