HNWI confidence falls as tax concerns grow – Saltus Wealth Index
The 10th edition of the biannual index, based on responses from 2,000 people with investible assets of at least £250,000, fell to 60.3 from 61.3 six months ago and 64.7 a year earlier.
Confidence among UK high-net-worth individuals (HNWIs) has declined over the past year amid growing concern around tax and wealth policy, according to the latest Saltus Wealth Index.
The 10th edition of the biannual index, based on responses from 2,000 people with investible assets of at least £250,000, fell to 60.3 from 61.3 six months ago and 64.7 a year earlier.
Confidence in the wider UK economy also dropped to 56%, compared with 66% a year ago and 84% ahead of Labour’s first Budget in August 2024.
Tax changes were identified as a key risk to personal wealth by 40% of respondents, behind inflation at 45%.
Two-thirds (67%) said they were concerned about a potential 10% tax on estates, including 31% who were very concerned, while 62% expressed concern about a possible annual wealth tax.
Inheritance and intergenerational wealth planning were also prominent concerns, with 67% worried about further changes to Inheritance Tax (IHT) and estate planning rules.
Some 60% were concerned about a potential reduction in the cap on lifetime gifting, while 64% expressed concern about the prospect of a land value tax being added to or replacing existing property taxes.
The research found 71% of HNWIs planned to use their main home to fund at least part of their retirement.
Respondents had an average net worth of £4.2m, including a main residence worth just over £1m on average.
Pensions emerged as the most widespread area of concern, with 70% worried about further potential reforms and 66% concerned about the removal of the pension tax-free lump sum.
Mike Stimpson, partner at Saltus, said: “In the five years we have been tracking the views, hopes and fears of the UK’s high net worth individuals we have built a clear picture of what this vital constituency of people think about the state of their own finances and those of the UK as a whole.
“We have seen countless economic and political shocks since our first edition back in 2021, leading to subdued confidence in the prospects of the country – but with a broadly positive market backdrop over that time, confidence in the state of their own finances has remained relatively strong.
“But today our data show that confidence among this group is softening further, with the focus having shifted squarely to what the Government might do next.”
He added: “The prospect of a 10% tax on estates is a clear worry, with two thirds of HNWIs concerned and almost a third very concerned. This is no longer a theoretical issue for families – it is becoming part of the conversation about when, how, and how much wealth should be passed on to the next generation.
“We are seeing the same concern across pensions, ISAs, Inheritance Tax, gifting and wealth taxation.
“Back in 2021, in the first edition of the Saltus Wealth Index Report, some of these policies barely featured in the debate. Today, they are shaping how HNWIs think about their financial futures.
“With the Autumn Budget approaching, greater clarity is vital.
“Families need to understand not just what changes might be introduced, but the wider direction of travel for wealth and taxation in the UK.”
Dr Michael Peacey, senior lecturer at the University of Bristol’s School of Economics, added: “The 10th edition of the Wealth Index gives us a useful perspective on how HNWI sentiment has evolved over time.
“The continued fall in the Index is significant, but perhaps more revealing is the changing nature of the concerns behind it.
“Policies that would have been relatively peripheral to the wealth debate five years ago are now a source of concern for a majority of HNWIs.
“The breadth of the response suggests that uncertainty around future taxation has become an important consideration in how individuals approach their wealth.”
He added:“The data also show that confidence in personal finances remains considerably stronger than confidence in the wider economy.
“This distinction is important: HNWIs may feel relatively secure themselves, while becoming increasingly concerned about the economic and policy environment in which they hold and pass on their wealth.”
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