Tax and government policy pose the biggest threat to high-net-worth investors’ wealth, ahead of economic and geopolitical issues, says Wealth Club.
According to the non-advised investment service, nearly half (47%) of HNWIs cited higher taxes as the biggest threat to their wealth, while 26% highlighted government policy as the biggest threat.
Less than one in 10 (9%) cited geopolitical events and only 3% see macroeconomic and market risks such as higher inflation and volatility as a threat, while 6% fear slow economic growth.
Wealth Club said investors are pessimistic on the economic outlook for the UK in general and on taxation, interest rates and inflation specifically. Seven in 10 (70%) said they were not very confident or not confident at all about the UK economy over the next 12 months. Almost six in 10 (58%) expect the Bank of England to raise interest rates over the next year, while 63% expect inflation to increase over the same period.
Virtually all of those surveyed (97%) believe taxes will definitely or probably increase over the next 12 months, with a rise in inheritance tax a leading concern (22%). A similar proportion (21%) are worried about the introduction of a wealth tax and 18% about an increase in capital gains tax.
HNWIs showed greater optimism about the UK stock market, with 34% believing it is undervalued and offers attractive long-term investment opportunities.
Alex Davies, founder and CEO of Wealth Club, said: “It is deeply worrying that millionaires now see tax and Government policy as a bigger threat to their wealth than inflation, market volatility or geopolitical events. That is an extraordinary finding and suggests confidence in the UK’s economic direction is already at a very low ebb.
“Investors understand that markets rise and fall. They can diversify, invest for the long term and take sensible steps to make their finances more tax efficient. But there is only so much individuals can do when the perceived threat to their wealth comes from government policy itself.”
Davies said that although the Government inevitably faces difficult choices in a bid to balance the books, they must recognise that tax increases and policy change will make Britain a less attractive place to save, invest and build businesses.
“That should concern ministers because confidence is ultimately what drives investment, entrepreneurship and long-term economic growth,” he added.
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