Key facts
- Wealth advisers are receiving numerous client questions due to growing speculation about the UK's Autumn Budget.
- Affluent households are reviewing retirement, pension, and inheritance plans amid fears of future tax changes.
- Clients are concerned about the cumulative impact of potential changes to pensions, inheritance tax, and capital gains tax.
- New research shows 58% of affluent UK adults rank changes to tax rules affecting retirement income as a top concern.
- Government borrowing in August was £18.3 billion, almost 20% higher than a year earlier.
- The top 1% of Income Tax taxpayers were liable for 27.2% of all Income Tax liabilities in 2023/24.
Wealth advisers are experiencing a significant increase in client inquiries as speculation intensifies regarding potential tax measures in the UK's upcoming Autumn Budget. Affluent households are reportedly reviewing their financial plans, including retirement, pension, and inheritance strategies, due to growing anxiety about future tax policy.
According to Rathbones, a prominent UK wealth and asset management group, clients are not solely concerned about a broad wealth tax but rather the cumulative effect of possible changes across various personal taxation areas. New research conducted by Rathbones among 2,036 affluent UK adults with at least £250,000 in investable assets found that 58% consider changes to tax rules affecting retirement income to be among their biggest retirement concerns. Additionally, 49% expressed anxiety over pension policy uncertainty, highlighting a need for additional support in financial decision-making.
Faye Church, Chartered Financial Planner and Head of Rathbones Guildford Office, noted that uncertainty itself is a significant challenge for clients, making long-term planning difficult. She stated that clients are seeking reassurance that their plans remain flexible, with a focus on long-term objectives and family circumstances rather than solely on tax implications.
The heightened concerns coincide with increasing pressure on the UK's public finances. Government borrowing in August reached £18.3 billion, a nearly 20% increase from the previous year and £3.5 billion above official forecasts, fueling speculation that the Chancellor may seek additional revenue sources. Data from HMRC also indicates a growing reliance on a small group of high earners, with the top 1% of Income Taxpayers accounting for 27.2% of all Income Tax liabilities in 2023/24.
Analysis by Rathbones suggests that the UK's tax advantage over much of Europe diminishes at higher income levels. While average earners face a lower overall tax burden in the UK compared to many European economies, the tax wedge for individuals earning five times the average wage is comparable to the European average. Jay Lawrence, Investment Director at Rathbones, added that clients are more worried about a series of smaller tax increases across different areas rather than a single wealth tax.