Wealthy Brits are accelerating plans to gift money to family members as fears over possible tax changes in the looming Autumn Budget grow.
Over 40 per cent of wealthy investors with an average wealth of £3.1m, said they have already gifted money or are seriously considering doing so over Budget worries, according to fresh analysis from Wealth Club.
Fears were centred on hiked taxes on savings and investments, with 63 per cent admitting they were concerned about increased tax bills.
“They are clearly very concerned that this month’s Budget will mean bigger tax bills for them and are reacting accordingly,” said Alex Davies, founder and chief executive of Wealth Club.
“Whether it is gifting more money to children and families than they had planned or seeking out tax efficient investments it is important to remember that decisions in the Budget to tweak tax rules have real world consequences.”
Capital gains and Inheritance tax
In particular, wealthy investors expressed concerns over potential hikes to capital gains tax or inheritance tax (IHT).
Healey has reportedly rejected calls from senior Labour figures to raise capital gains tax to the same levels as income tax, after warnings it could harm the UK’s investment appeal.
But the Chancellor is said to be plotting a tax raid on family businesses in a bid to avoid spending cuts.
The Chancellor is considering proposals to levy income tax when business owners hand their company down to their children, potentially almost doubling the tax bill, according to a report in the Telegraph.
Under current rules transfers can be structured in a way that allows them to attract capital gains tax which is charged at a lower rate.
Investors are already grappling with major changes to IHT introduced under former chancellor Rachel Reeves, including bringing pensions into the tax scopes, abolishing the non-dom regime and placing a 20 per cent levy on agricultural and business assets worth over £1m.
Speculation is also rising that Healey is considering introducing a lifetime gifting cap or adjusting the seven year exemption rule.
Dodging tax changes
Wealthy investors are also debating other courses of action in the lead up to the Budget to avoid a possible tax shakeup, including taking money from pension funds.
Nearly 30 per cent said they would put money into tax efficient vehicles, such as ISAs, while others are opting to delay investing until after the Budget.
Meanwhile, just over a quarter have sold investments and other assets, such as property, or retreated to the safety of cash.
Davies warned that if Healey opted to hike revenue, wealthy Brits would continue to look to avoid a large tax bill, leading them to “cut investment which is needed to support growing businesses” and the economy.