Wealthy investors accelerate family gifting ahead of Budget amid tax fears

Wealthy investors are bringing forward gifts to family members and changing investment plans amid concerns about tax rises in the Budget, with 42 per cent having increased gifts or seriously considering doing so, research by Wealth Club has revealed.

The survey of 506 clients, with average wealth of £3.15m including property, pensions and investments, found that nearly one in four (24 per cent) had already sold investments to avoid a potential increase in capital gains tax (CGT), which Chancellor, John Healey, has reportedly ruled out.

CGT changes were the biggest Budget concern for 21 per cent of respondents.

Overall, 63 per cent said they were very concerned about higher taxes on savings, investments and wealth, while a further 29 per cent were fairly concerned.

One in six (16 per cent) were considering moving abroad because of tax changes in recent years, with another 16 per cent having seriously considered leaving but unlikely to do so.

Investors are also taking other steps ahead of the Budget, which takes place on 28 October.

Around 30 per cent are withdrawing money from pensions or considering doing so, while 28 per cent are increasing investments in tax-efficient products.

The same proportion are delaying investment and financial decisions until after the Budget.

More than a quarter (26 per cent) have sold or are considering selling investments and other assets, while 18 per cent are holding more cash.

Wealth Club founder and CEO, Alex Davies, said: “Our research shows just how much Budget uncertainty is affecting people’s financial decisions.

"More than two in five have already increased gifts to family or are seriously considering doing so, while 30 per cent are taking money out of pensions or considering it. These are major decisions, with consequences that can last long after Budget day.

“The reports today that the Chancellor has ruled out a CGT rise show the damage this uncertainty can cause.

"Nearly a quarter of those we surveyed have already sold investments to avoid an increase. Some will have brought forward tax bills and sold investments they would otherwise have kept, to beat a tax rise that now looks set never to happen."

Davies also joined the warnings that prolonged speculation was also discouraging investment and prompting wealthy individuals to consider leaving the UK.

“Investors don’t expect tax rules to stay the same forever. But they do need greater certainty. The government needs to recognise that prolonged uncertainty damages confidence and holds back investment, even when the tax rises never happen,” he said.

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