Tax concern is now one of the biggest drivers of financial planning for Britain’s wealthiest, with many taking defensive steps ahead of pensions falling under Inheritance Tax (IHT) from 2027.
According to the latest Saltus Wealth Index Report, which surveyed 2,000 individuals with at least £250,000 in investible assets, 17 per cent believe IHT is the most unreasonably high tax in the UK well ahead of Capital Gains Tax or Corporation Tax. Nearly half (46 per cent) think the IHT threshold, currently frozen at £325,000, should rise to around £600,000 to reflect inflation and soaring asset values since the limit was set in 2009.
HMRC data show that IHT receipts reached a record £8.2 billion in the 2024–25 tax year, up £800 million year-on-year. Wealthier households are now reassessing how they structure their assets and retirement funds, as frozen thresholds pull more estates into the tax net.
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A particular concern for Britain’s wealthy is the government’s decision to include defined contribution pensions from April 2027. One in three HNW respondents are already taking steps to shield their pensions from the tax, while three in ten are actively reviewing their pension or retirement strategies in anticipation of change.
The Wealth Index now stands at 64.7, up from 58.2 earlier this year, reflecting a partial recovery in confidence among HNWIs, though still below last year’s peak of 66.9, showing ongoing caution.
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Speculation that the Treasury could look to other pension benefits – such as the 25 per cent tax-free lump sum entitlement – has fuelled further unease among savers already adapting to the new IHT rules.
Alex Pugh, financial planner at wealth manager Saltus, said tax has become ‘one of the biggest sources of uncertainty’ among clients this year. ‘The decision to bring pensions into scope from 2027 has really sharpened focus on long-term planning,’ he said. ‘Many clients are asking whether the rules could change again, and how to prepare without making reactive decisions.’
Pugh added that inheritance and legacy planning must now be approached with greater nuance: ‘There’s no one-size-fits-all answer. Strategies like annuities, gifting, or business relief investments all have a place depending on individual goals. What matters is keeping planning aligned to values and long-term objectives, rather than reacting to every headline.’
HNWIs are balancing prudence with selective risk-taking, pursuing early-stage investments while strengthening protections for families and estates through trusts, gifting, and estate planning.
With 78 per cent of respondents expecting further tax rises in the forthcoming Autumn Budget, the mood among the UK’s wealthy is one of caution and protection. More than a third believe the Labour government will raise IHT again – while over half of Labour-voting HNWIs say they now regret their decision at the ballot box due to IHT concerns.
