Wealthy investors increase gifting ahead of Autumn Budget tax concerns

Affluent British investors are hastening plans to transfer wealth to family members amid growing apprehension over potential tax increases in the upcoming Autumn Budget. Fresh analysis from Wealth Club indicates that more than 40 per cent of wealthy investors, who hold an average of £3.1m in assets, have already gifted funds or are seriously contemplating doing so in response to these fiscal worries. The primary source of anxiety appears to be the prospect of higher taxes on savings and investments, with 63 per cent of respondents admitting concern over rising tax liabilities.

Alex Davies, founder and chief executive of Wealth Club, noted that investors are reacting to the possibility of larger tax bills by altering their financial strategies. He highlighted that whether individuals are gifting more money to children and families than originally planned or seeking tax-efficient investments, the decisions made in the Budget to adjust tax rules carry significant real-world consequences. Specific concerns are focused on potential hikes to capital gains tax or inheritance tax. While reports suggest the Chancellor has rejected calls from senior Labour figures to align capital gains tax with income tax levels, there are indications of a planned tax increase on family businesses to avoid spending cuts.

Proposals under consideration include levying income tax when business owners pass their companies to their children, which could nearly double the tax bill compared to the current lower rate of capital gains tax. Investors are also navigating major changes to inheritance tax introduced under former chancellor Rachel Reeves. These changes include bringing pensions into the tax scope, abolishing the non-domicile regime, and imposing a 20 per cent levy on agricultural and business assets valued over £1m. Speculation is also mounting that the Chancellor may introduce a lifetime gifting cap or modify the seven-year exemption rule.

In preparation for the Budget, nearly 30 per cent of investors intend to place funds into tax-efficient vehicles such as ISAs, while others are delaying investments until after the announcement. Just over a quarter have sold investments or other assets, including property, or moved funds into cash. Davies warned that if revenue hikes are implemented, wealthy Brits will continue to seek ways to avoid large tax bills, potentially leading to reduced investment needed to support growing businesses and the broader economy.