A new survey by RBC Brewin Dolphin reveals that nearly three quarters of wealthy individuals (73%) have never made a financial gift as part of their annual gift allowance.
The survey, which canvasses the views of 1,030 UK individuals with either personal income over £100k, investable assets over £500k, or a house value over £1 million, found that only 27% of overall respondents have made a gift in their lifetime.
While this figure jumps to 39% amongst those aged between 65-74 and 45% for over-75s, the research highlights that overall levels of lifetime gifting remain low across all age groups.
The upcoming Autumn Budget appears to have done little to motivate individuals to start gifting. Despite changes to Inheritance Tax being the most common concern (51%), only 15% of respondents have accelerated gifting to family over the past year.
However, of the minority who are gifting, the rumours of upcoming changes have encouraged over half to increase the number of gifts they are making (51%) as well as their value (54%).
Michelle Holgate, Financial Planning Director at RBC Brewin Dolphin, comments:
“It’s clear that while many affluent individuals are concerned about potential changes to Inheritance Tax, an overwhelming majority – across all age groups – are still not taking advantage of their annual gifting allowances.
“Among those who have started gifting, our research shows that children, grandchildren and charities are the most common recipients of financial gifts, highlighting a strong desire to support loved ones and give back to good causes.”
The level of concern is high
Nearly 4 in 5 of those surveyed say they are concerned about the upcoming budget (78%), with over a third extremely concerned (36%).
Over half (56%) are concerned that the Inheritance Tax thresholds –the £325,000 nil-rate band and the £175,000 residence nil-rate band – have been frozen until 2030, meaning that more estates could be drawn into paying the tax as house prices and inflation rise.
The survey also reveals that concerns around Inheritance Tax are closely followed by worries over frozen Income Tax thresholds (48%), and potential changes to pension tax relief (47%).
The financial advice gap
Amongst those who are concerned about the upcoming budget (78%), only 10% have reached out for financial advice in the past year, with a third (30%) continuing to receive financial advice. More than half (60%) do not receive any advice at all.
However, the findings offer some reassurance that most people are avoiding knee-jerk financial decisions. Of those aged over 55 who have not yet withdrawn their tax-free pension lump sum, 85% say they are not tempted to do so ahead of the Budget.
Instead, many are taking proactive steps to strengthen their long-term finances. 17% of individuals report having increased their pension contributions since the last Budget, rising to 32% among respondents who earn more than £100,000 a year.
Holgate adds: “It’s a relief that most people are not making impulsive decisions in response to uncertainty around the upcoming Budget and are instead taking sensible steps to help build their long-term finances, such as increasing pension contributions.
“However, there remains a huge gap between those who are concerned about the impact of potential tax changes and those who are taking action and seeking out professional advice. Especially during times of uncertainty, financial planning is an essential tool that can empower individuals to manage their wealth effectively and balance their needs of today with their goals of tomorrow.”
