Rich people sell shares and properties in fear of rising capital gains tax in the UK
According to the Financial Times, many wealthy individuals in the UK are divesting from various assets, including shares and property. Wealth managers across the country are reporting an increase in activity among their wealthy clients, who are preparing for a possible increase in capital gains tax.
According to the newspaper, financial planners say that the wave of sales covers a diverse group of customers, from company executives to businesspeople. Speculation revolves around the possible fiscal policies of Keir Starmer’s Labor Party, should it win the July 4 elections.
“We are seeing many clients concerned about a potential increase in capital gains tax,” explained Toby Tallon, partner at Evelyn Partners, to the FT. Tallon noted that many clients are shedding assets, particularly those in need of immediate liquidity, while others are adopting a cautious “wait and see” attitude as they await the outcome of the election.
Nick Ritchie, senior director at RBC Wealth Management, also interviewed by the FT, echoed these sentiments, highlighting the “general nervousness” due to the uncertainty surrounding Labour’s fiscal policies. He revealed that a minority of clients have already sold assets to ensure their gains are taxed at the current rate of 20%, fearing future increases. Ritchie also warned of a potential exodus of wealthy individuals seeking to avoid higher taxes, which could result in a damaging “brain drain” for the UK economy.
Andrew Shepherd, Chief Executive of Brooks Macdonald, a wealth management firm, warned the FT that such a move could “potentially discourage investment in the UK at a critical time for the economy”. Shepherd highlighted that customer information requests typically increase during election periods, as people seek guidance on the impact new policies may have on their financial strategies.
The Conservative Party has committed not to increase tax on capital gains.
Labour, seeking to reassure the public, reiterated that its plans do not involve additional tax increases.
“We have presented fully budgeted and funded plans, with very specific fiscal gaps that we will close,” said a party spokesperson.
