HNWIs see taxes and govt policy as biggest threats to wealth

High net worth individuals (HNWI) view taxation and government policy as the biggest threats to their wealth, Wealth Club has found.

The non-advised investment services firm’s research found that 47 per cent of HNWIs, whose average wealth is around £4.5m, cited higher taxes as the biggest threat, while 26 per cent chose government policy.

This compares to just 9 per cent who listed geopolitical events as the biggest threat, followed by slow economic growth (6 per cent), and higher inflation and volatility (3 per cent).

Wealth Club found that investors were pessimistic on the economic outlook for the UK in general, on taxation, interest rates and inflation specifically.

Seven in 10 (70 per cent) said they were not very confident or not confident at all about the UK economy over the next 12 months.

Almost three in five (58 per cent) expected the Bank of England to raise interest rates in the next year, while 63 per cent believed inflation will rise in the same period.

Nearly all (97 per cent) of the HNW individuals surveyed believe that tax will definitely or probably increase over the next 12 months, with 22 per cent concerned about a rise in inheritance tax and 21 per cent worried about the introduction of a wealth tax.

Wealth Club founder and CEO, Alex Davies, stated: "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.

"Governments inevitably face difficult choices and must balance the public finances. However, they should also recognise that every increase in the tax burden and every policy change that makes Britain a less attractive place to save, invest and build businesses risks further undermining confidence.

“That should concern ministers because confidence is ultimately what drives investment, entrepreneurship and long-term economic growth."

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