More than half of advised clients (53%) say they are more worried about tax concerns than they were a year ago, according to a new survey of advised clients.
The survey for adviser platform Wealthtime suggests that fears about rapidly rising tax bills and reduced tax allowances are unsettling advised clients who are showing signs of “tax anxiety.”
The Government has frozen income tax thresholds until 2031 resulting in more people paying more tax and is scaling back tax allowances in many areas including ISAs, IHT and salary sacrifice.
The survey of 1,000 adults aged 35+ with average assets of £350,000 found:
- 53% of UK consumers who have taken financial advice in the last three years are more worried about tax now than they were a year ago
- 47% cite tax rules and allowances as a major source of uncertainty with 30% confused about pensions rules
- 74% have at least one tax year-end regret, such as leaving decisions too late, missing an allowance or keeping too much money in cash
The survey found that confidence in tax year-end planning is “low”, with the inaugural Wealthtime Tax Year-End Confidence Index averaging 45.7/100.
Wealthtime says the survey reveals that “tax anxiety” is rising among advised clients, driven by confusion over rules and allowances.
The survey was conducted by researchers Ad Lucem in January among 1,000 UK adults aged 35+ with average investable assets of £350,000.
The study found that 30% of advised clients, for example, admit that they are confused about pension rules and last-minute tax decisions are “common.”
More than half of advised (52%) completed most of their tax year end activity in March or April last year, with a quarter (24%) leaving it to the final week.
The biggest barriers to acting sooner were lack of time (28%), fear of making the wrong choice (27%) and uncertainty about what to prioritise (21%).
Tax year end regret is widespread with three-quarters (74%) reporting at least one regret, most commonly leaving decisions too late (27%), missing an allowance (23%) and keeping too much money in cash (18%).
Those currently working with a financial adviser were more confident in tax planning, scoring higher than those no longer taking advice. Only 20% of currently advised clients fall into the low confidence category (an Index score of 40 or below), compared to 45% of previously-advised clients.
Kylie Clark, director at Wealthtime, said: “Tax year end is becoming increasingly stressful for investors. Changing rules and allowances mean even financially engaged clients can feel unsure about what action to take and when. What’s clear from our research is that ongoing advice makes a measurable difference.”
Phillip Wickenden, founder of Ad Lucem, who led the research, said: “What stands out isn't that clients are complacent, it's that they're cautious. And caution, left unmanaged, looks a lot like procrastination. The data consistently shows that reassurance and structure beat urgency-based messaging.”
• Survey conducted by Ad Lucem in January on behalf of Wealthtime.