Wealthy Brits' Confidence Plummets Amid Tax Reforms and Economic Woes
Confidence among high-net-worth individuals (HNWIs) in the UK economy has eroded dramatically over the past six months, as a perfect storm of tax rises, sluggish growth, and stubbornly high interest rates continues to eat away at sentiment among affluent households. According to a regular study of wealthy UK residents, HNWIs' overall confidence in the economy has fallen from 66 percent to 59 percent, remaining considerably lower than the 84 percent recorded shortly before Labour's maiden Budget.
Tax Reforms Fuel Discontent
Nearly 50 percent of respondents felt that they pay too much tax, with one in five citing higher income tax rates as the least popular of a string of tax rises. This follows Chancellor Rachel Reeves' decision in November to freeze income tax thresholds, aiming to draw more taxpayers into higher bands. Inheritance tax also drew criticism, with almost 30 percent of those surveyed believing it should be abolished.
Last year's Autumn Budget introduced further punitive tax reforms, including capping salary sacrifice schemes, freezing tax thresholds, and lowering the cash ISA ceiling to address a £21 billion fiscal shortfall. These measures have compounded unease among wealthy Brits about the increasingly progressive tax system, according to the study's authors.
Personal Finance Concerns Intensify
Confidence in personal finances has also dipped, with inflation identified as the biggest perceived risk to personal wealth. Many HNWIs highlighted that sending their children to private school has added to financial difficulties, especially after the government made school fees liable to VAT in its maiden Budget. Over 68 percent plan to sacrifice other luxuries to continue paying school fees.
HNWIs are adopting a more cautious approach to long-term planning, with just 11 percent using their full £60,000 pension allowance last year and average contributions at £31,500, indicating growing worries about retirement costs. Older HNWIs felt the least confident in their finances, while those with children expressed concerns about the tax system's impact on their children's future financial independence.
Political Regret and Relocation Plans
Eroding economic confidence has led some HNWIs to reevaluate their political affiliation. The poll found that four in ten voted for Labour in the last election, but only 30 percent would do so again, citing issues like graduate employment collapse and rising government borrowing. Support has shifted, with over 30 percent of those over 55 expressing allegiance to Reform, while Conservative favor remained flat at 20 percent.
Political and economic woes are pushing more wealthy Brits to consider leaving the UK permanently. Over 25 percent of respondents are contemplating relocation, with 11 percent already starting the process. Nearly 20 percent are looking to move to the US, while others plan to relocate to Canada, Spain, the UAE, and Australia, joining an exodus of HNWIs and entrepreneurs seeking opportunities in tax havens.
