Taxing times for HNWIs

UK inheritance tax (IHT) is front of mind this week with news that HMRC’s yield from IHT investigations reached a four-year high of GBP274 million in 2019. HMRC opened some 5,658 investigations during the year, which equates to an average yield of GBP48,422, a 22 per cent increase on the 2016-17 figure of GBP39,763. And private client law firm Wilsons says the Revenue is targeting investigations into the estates of HNWIs because they offer a ‘better return on investment’.

A growing number of people, meanwhile, are investing in small unlisted companies as a way of passing on wealth and reducing their IHT bills, according to private equity investment firm Growthdeck. The amount of tax relief claimed on investments in unlisted companies and other business assets passed on in estates jumped 64 per cent last year to GBP1.4 billion, up from GBP828 million the year before. But the firm says that a lack of awareness as to how this tax relief can be used as part of IHT planning means that many people are still paying more than they need to.

The three Cs – caution, cash-conservation, and Covid-19 – all feature prominently in the results of a new survey by Citi Private Bank’s Private Capital Group exploring the thinking of UHNWIs and family offices in these uncertain times. Some 59 per cent of family offices say they have increased their allocations to direct investments for the next 12 months, while almost half of all those surveyed are expecting meagre portfolio returns in the next four quarters of between one and five per cent.

At that rate it could take a while for things to return to pre-pandemic levels with a new study of wealth managers, discretionary fund managers (DFMs), banks, and platform providers by wealthtech firm Dunstan Thomas, revealing that the value of the average investment portfolio fell by 12.5 per cent between mid-February and mid-June.

Gina and Alan Miller, the husband and wife team behind the True and Fair Campaign, which is calling for increased transparency, accountability, and improved customer outcomes in the UK financial services sector, are back in the news this week, having delivered a 10-point action plan to the Financial Conduct Authority (FCA) ahead of the new Chief Executive, Nikhil Rathi, taking up his post this Autumn.

“The arrival of a new CEO is an opportune moment for change and long overdue reforms to ensure customers are treated fairly," says Gina Miller. "

And sticking with fair treatment, we also have news of how UK kids believe they are being short-changed by the Bank of Mum & Dad. Based on a nationwide survey of six to 16-year-olds, a new report says that the majority of the nation's minors say that they should be paid double the amount of pocket money they currently receive (GBP6.48 per week). Kids in Norwich though, with the UK's top average weekly 'pay packet' of GBP7.07, will be hoping their parents don't up-sticks and move to Nottingham, where parents are the UK's stingiest coughing up an average of just just GBP4.65 per week.

Wealth Adviser
 

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