Advisers say clients fear other tax rises more than a wealth tax

Laith Khalaf
2 March 2021

•    38% of advisers said their clients would least like to see a wealth tax in 2021; but 62% said clients feared other taxes more
•    CGT rises and withdrawal of higher rate tax relief were also high up the list
•    Clients have mainly been asking advisers for help with investments throughout the pandemic
•    More than two thirds of advisers think tax rises will lead to more people seeking financial advice

Results from an AJ Bell Survey of over 400 financial advisers conducted January 2021

Laith Khalaf, financial analyst at AJ Bell, comments:

“As we approach the Budget, it’s not surprising to learn that many advisory customers wouldn’t welcome a one-off wealth tax, as they are likely to be directly in the firing line. What is remarkable is that the majority of advisers thought that other tax rises would be even less popular with their clients than a wealth tax.

“38% of advisers we surveyed said their clients would least like to see a one-off wealth tax in 2021. But 19% said their clients would least like to see removal of higher rate tax relief on pension contributions, and a further 19% identified a rise in capital gains tax as the fiscal policy which would be least popular with their clients. The remaining 24% of advisers thought clients would least welcome a reduction of the IHT threshold, or a 1% rise in income tax.

“This suggests that while a wealth tax may not be exactly popular with those who have sought financial advice, other tax rises are cause for significant concern too. Whether the Chancellor uses the Budget, or a fiscal event later in the year, to repair government finances, we all know tax rises are in the post. A wealth tax seems an outside bet at the moment, but CGT looks like low hanging fruit, seeing as the Office for Tax Simplification has specifically recommended that it be brought in line with income tax rates.

“Advisers do largely think that tax rises will lead to more people seeking financial advice, which makes sense seeing as tax planning is a cornerstone of the value that financial advisers can offer to their customers. However, over the course of the pandemic, advisers said quite clearly that investments were the area where customers were looking for help the most, as market turmoil created both threats and opportunities.”

AJ Bell Adviser Survey Results

Laith Khalaf
Financial Analyst

Laith Khalaf started his career in 2001, after studying philosophy at Cambridge University. He’s worked in a variety of roles across pensions and investments, covering both the DIY and the advised sides of the business. In 2007, he began to focus on research and analysis, and has since become a leading industry commentator, as well as a regular contributor to the financial pages of the national press. He’s a frequent guest on TV and radio, and for several years provided daily business bulletins on LBC.

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