UK: IHT Top Concern For Wealthy Individuals

New research released this week by RBC Wealth Management (part of the Royal Bank of Canada) looks at the top financial concerns of wealthy individuals across the UK in 2024.

Inheritance tax, gifting and not knowing how much is enough to maintain their lifestyles in later life are the top three financial concerns of wealthy individuals across the UK, according to new research from RBC Wealth Management.

Across generations, IHT remains the number one concern despite ongoing speculation of a potential tax cut, jumping from 27 per cent in the prior year’s survey to 35 per cent, the research shows.

The survey was commissioned by RBC Wealth Management and conducted in collaboration with Kantar Media in October 2023 with 600 respondents with a minimum of £500,000 ($629,000) in investable assets.

Inheritance tax is typically paid at a rate of 40 per cent over certain thresholds; money can be passed on IHT-free to a spouse or civil partner, who will then also inherit the allowance when they die. See more coverge on IHT here.

RBC’s poll also found that wealthy individuals (particularly among 35 to 54-year-olds) are concerned about gifting – they don’t want to lose control or give too much too soon. This age group saw the sharpest year-on-year rise from 16 per cent to 23 per cent.

Furthermore, not knowing how much is enough to maintain lifestyles in later life is a concern for respondents, with those closest to retirement ages most concerned (31 per cent). The survey showed that younger, pre-retirement respondents are increasingly worried (24 per cent) about this topic compared with the prior year’s survey (20 per cent).

“The survey results point to the wealthy re-evaluating later life priorities and wealth stewardship, a trend likely prompted by the UK’s uncertain political and economic future, which could potentially alter the future landscape of intergenerational transfers,” Nick Ritchie, senior director of wealth planning at RBC Wealth Management, said. “What is also interesting is that we’re seeing that the younger wealthy are showing the highest level of concern over wealth transfer, according to the research.”

“In this environment, establishing a financial plan is of the utmost importance but so too is regularly reviewing it,” Ritchie continued.

Changes to the capital gains tax rate is another top concern for wealthy respondents, with those in pre-retirement aged 55 to 65 most concerned, reaching 27 per cent in 2023 versus 14 per cent in 2022. The survey showed that male respondents are more worried, compared with female respondents.

The research also found that almost 30 per cent of women have hesitated to apply for wealth management products due to a lack of understanding, compared with only 10 per cent of men, with women also being a lot less confident than men when it comes to investment management and diversifying assets.

“The fact that three times more women than men hesitated to apply for wealth management services in 2023 because of a lack of understanding cannot be ignored, particularly in light of the bumpy road ahead of us,” Annabel Bosman, head of relationship management at RBC Wealth Management, said. “At RBC we aim to bridge this gap by demystifying the complexities of wealth and investment management by offering accessible, gender-inclusive services that empower women of all age groups to efficiently manage, grow and protect their wealth.”

RBC Wealth Management serves affluent, high net worth and ultra-high net worth clients globally with a full suite of banking, investment, trust and other wealth management solutions, from its key operational hubs in Canada, the US, the UK, and Asia, with over C$3.9 trillion ($2.89 trillion) of assets under administration, and over C$1 trillion of assets under management.