UK’s wealthiest brace for tax hikes as Budget rumours swirl, Saltus finds

UK high-net-worth families are bracing for a wave of tax hikes amid budget rumours, according to Saltus' bi-annual Wealth Index. The survey of more than 2,000 adults with investable assets of at least £250,000 found that about 78% expect new or higher taxes over the next 12 months, and 48% say tax changes pose the biggest risk to their wealth. Confidence in both the economy and personal wealth has edged up to 64.7 on the Saltus barometer from a record low of 58.2 in February, following Chancellor Rachel Reeves's inaugural Budget.

Tax changes are expected to focus on capital gains and income taxes. Some 46% of respondents think capital gains tax will rise in the next year, while 34% expect a rate increase to be frozen. The Saltus report notes a long-running cut in the annual CGT allowance—from £12,300 to £3,000—while CGT rates rose last year to 18% for basic-rate taxpayers (up from 10%) and 24% for higher- and additional-rate taxpayers (up from 20%). The resilience of equity markets plus ongoing inflation has raised concerns that income tax changes could follow, with two in five high-net-worth individuals now believing the Exchequer will break its pledge not to raise income tax, and many braced for higher rates in the coming year.

Inheritance tax remains a focal point as the Labour Government contemplates reforms that would alter how wealth is passed between generations. An estate must exceed about £325,000 to incur IHT, and that threshold can be doubled to £650,000 for married couples or civil partners. The residence nil-rate band can add £175,000 per person for those who leave their home to direct descendants, creating a potential maximum joint total of about £1 million that a couple can pass on tax-free. The Saltus respondents split on IHT: more than one in three think the 40% death-tax rate will rise, and 47% expect the nil-rate band to be frozen, signaling a continuation of stealth-tax dynamics on wealth. Moreover, the report notes that changes to IHT and pensions policy are reshaping retirement planning and estate strategies for many families.

Against that backdrop, wealth managers say clients are increasingly turning to wealth-protection strategies such as trusts, gifting and estate planning in a bid to shield legacies from future taxes. The emphasis on wealth preservation underlines a broader shift in planning priorities as high-net-worth households navigate a policy landscape that could redefine what can be passed down to future generations.

Labour Budget dented confidence in the economy remains evident, however. Confidence in the economy among high-net-worth households rose from 48% in February to 66% in August, according to Saltus, but the index notes that August’s level is still the second-lowest on record and well below the 84% seen before last year’s Budget. Dr Michael Peacey, a senior lecturer at the University of Bristol’s school of economics and a compiler of the index, said the reading captured a rebound after a period of policy-driven volatility but cautioned that inflation, geopolitical uncertainty and the prospect of further tax rises weigh on sentiment. "The UK has seen slight growth in GDP and real wages, a fall in interest rates and a UK-US trade deal. Yet persistent inflation and the prospect of further tax rises in the November 2025 Budget weigh on sentiment," Peacey said.

Sweeping regret for Labour voters is also evident. While 49% of the nation’s wealthiest people voted Labour at the last election, almost half now regret that decision. The main drivers for regret center on the economy’s underperformance and underinvestment in the NHS, with inheritance tax reform cited as a key factor for some voters. Reeves outlined changes in IHT last year, including moves that sheath pensions into the IHT net, which has upended retirement planning and made it harder to leave a substantial tax-free legacy to family. In addition, the reform to pensions and the addition of VAT to private school fees are prompting some wealthy families to consider relocating abroad. Nine in ten of those surveyed with children send their children to private school, and 71% say they have or will make sacrifices to cover fee hikes.

The Saltus Wealth Index thus signals that, even as investors show a degree of renewed optimism, the policy horizon remains a sober drag on confidence. The autumn Budget looms as a critical checkpoint for the wealthiest households, advisers and policymakers alike, with expectations that CGT, IHT and income-tax changes will be closely watched as signals of the government’s approach to growth, investment and wealth preservation. The report’s authors caution that the wealth creators, investors and employers who drive economic growth remain sensitive to policy clarity and fiscal stability, underscoring the potential macroeconomic ripple effects if confidence continues to wobble in the face of tax-fuelled uncertainty.