Budget: Tax hikes loom for Britain’s wealthiest
Wealthy Brits are bracing themselves for a raft of tax rises in the looming Autumn Budget, prompting many to scramble to protect their wealth.
According to the latest Saltus wealth index, nearly 80 per cent of high net work wealthy individuals (HNWIs) expect Labour to impose further tax rises in the next 12 months.
While confidence in the UK economy is recovering, up from 48 per cent to 66 per cent, optimism has been stalled by the expectation of further rises in order to stabilise public finances.
In particular, 46 per cent predict a hike to Capital Gains Tax, while more than a third of respondents believe IHT will be raised again despite criticism from industry figures.
Over 40 per cent predict a hike to employer’s national insurance, despite previous rises impacting business performance.
This reflects a growing unease among wealthy individuals about the direction of government policy, as Reeves looks to fill a £20bn black hole while reinforcing her commitment to the fiscal rules and manifesto pledge not to raise taxes on working people.
Almost 50 per cent said they expect VAT to be frozen in the next twelve months due to Labour’s manifesto commitment not to put up taxes on ‘working people’.
Mike Stimpson, partner at Saltus, said: “HNWIs are braced for further changes at the Autumn Budget given the Chancellor’s limited fiscal room for manoeuvre.
“This cohort are the wealth creators, investors and employers who drive economic growth – if their confidence is undermined by continual uncertainty, that has consequences for everyone.”
Inheritance tax woes
Many HNWIs believed IHT to be one of the most unfair taxes, with 30 per cent wanting it to be abolished altogether.
Others wish to see the £325,000 threshold increased, with many hoping for a doubling of the current level, highlighting the gloomy attitude surrounding the deeply unpopular tax.
Concerns surrounding inheritance tax have also caused individuals to review their pension arrangements, with over a third considering strategies to protect their wealth from changes, including using other savings vehicles to manage their tax exposure.
Ray Turner, chartered financial planner at Saltus, said: “Many are fearful of even further reforms to IHT.”
“Unfortunately there is no silver bullet for IHT mitigation, the landscape is complex and evolving, and all mitigation strategies have their own trade offs.”
The changes already set to shake up IHT caused a startling 53 per cent to admit they regretted voting for Labour.
Personal finance concerns
While many HNWIs fear the prospective repercussions of the Chancellor’s Budget decisions, they are becoming increasingly confident about their personal finances, with levels rising from 86 per cent to 92 per cent.
However, Saltus believed the reaction may be tied to the quick market recovery in April, with older respondents reportedly less confident than younger generations, suggesting caution as well as a focus on wealth preservation rather than obtaining more.
Despite increasing optimism, fears of dominant threats to personal wealth remained, with 58 per cent viewing inflation as a top concern.
This was closely followed by tax changes due to the embedded fear of Budget rises, with 46 per cent citing it as their biggest threat to their wealth.
Others expressed worry about cyber security threats due to the series of high profile attacks in recent months, including at Marks and Spencers, as well as energy prices, economic recession and interest rates.