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Tax uncertainty facing the UK election is main concern for HNWIs

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According to a survey published by Saunderson House, a London-based wealth manager, a change in government and a rise in taxes are the primary threats to financial independence and wellbeing amongst high net worth individuals (HNWIs).

“A change in government has been the biggest concern amongst our clients,” says Gareth Parsons, financial planning director, Saunderson House. “It is the uncertainty of what future tax legislation there may be and not being able to plan, rather than not wanting to pay their fair share of taxes.”

 
The report, ‘Passing on Wealth: Motivations, Emotions and Challenges’ which surveyed around 100 Saunderson House clients, found that there was particular concern over the prospect of a potential Labour government. “From our interviews, we know that some HNWIs believe that a Corbyn government could be more deleterious than the UK leaving the EU,” states the report. Respondents ranked a change in UK government as their greatest concern (4.1 out of five).
 
Tax rises ranked 3.8 out of five in importance in the report. This is a significant change to last year where HNWIs ranked an increase in tax as the seventh biggest concern – in 2019, higher taxes are the second highest concern.
 
“Our conversations with clients have been mainly around the fear factor,” says Parsons. “But our message is not to panic. We recommend that our clients look at long term planning rather than a five-year shift in government.”
 
The respondents were defined as those with around GBP800,000 of investable assets (excluding property), with 80-85 per cent of respondents holding, or have held, a senior position in the legal or accountancy sectors. The rest were a combination of entrepreneurs, bankers and insurance professionals.
 
One surprise from the report, says Parsons, is that only one-third (33 per cent) says they are concerned about preserving their wealth across multiple generations. “We find that they are primarily concerned with using their wealth to support their children,” says Parsons, adding that many don’t want to excessively pamper their children, but rather provide financial support in a way that makes the most impact.
 
Parsons explains that HNWIs aren’t feather-bedding their children, but they want to provide a well-timed ‘feather-boost’ often through education fees or deposits for first homes. “Our clients are concerned about passing on too much wealth in case it impacts their children’s lifestyles or limits their motivation to pursue their own path in life,” he adds.
Elsewhere, the research finds there is a sizeable difference between the levels of importance and comfort HNWIs assign to their children when it comes to matters of intergenerational wealth transfer. Whilst 93 per cent of HNWIs rank their children as their most important consideration, only 74 per cent are comfortable talking to them about plans to pass on their wealth. Instead, HNWIs are much more comfortable speaking to their financial adviser or partner (97 per cent and 96 per cent).

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