High net worth investors regard taxation and Government policy as the biggest threat to their wealth – way ahead of economic and geopolitical issues, new research from Wealth Club, the UK’s leading non-advised investment service for high-net-worth individuals, shows.

Nearly half (47%) of the respondents cited higher taxes as the biggest threat to their wealth while more than a quarter (26%) highlighted Government policy as the biggest threat substantially ahead of geopolitical events (9%).

Macroeconomic and market risks such as higher inflation and volatility were only seen as a threat by around 3% while 6% fear slow economic growth. Estimated average wealth of those surveyed is around £4.5 million.

Investors are pessimistic on the economic outlook for the UK in general and on taxation, interest rates and inflation specifically. Seven in ten (70%) said they were not very confident or not confident at all about the UK economy over the next 12 months.

Nearly six in ten (58%) expect the Bank of England to raise interest rates over the next 12 months, while nearly two thirds (63%) expect inflation to increase over the same period.

Almost all (97%) believe taxes will definitely or probably increase over the next 12 months. They are most concerned (22%) about a rise in inheritance tax while 21% are worried about the introduction of a wealth tax and 18% about an increase in capital gains tax.

They are more optimistic about the UK stock market – more than a third (34%) believe it is undervalued and offers attractive long-term investment opportunities while 36% believe it is fairly valued.

Alex Davies, Founder and CEO of Wealth Club, said:

"It is deeply worrying that millionaires now see tax and Government policy as a bigger threat to their wealth than inflation, market volatility or geopolitical events. That is an extraordinary finding and suggests confidence in the UK's economic direction is already at a very low ebb."

“Investors understand that markets rise and fall. They can diversify, invest for the long term and take sensible steps to make their finances more tax efficient. But there is only so much individuals can do when the perceived threat to their wealth comes from Government policy itself."

“Governments inevitably face difficult choices and must balance the public finances. However, they should also recognise that every increase in the tax burden and every policy change that makes Britain a less attractive place to save, invest and build businesses risks further undermining confidence."

"That should concern ministers because confidence is ultimately what drives investment, entrepreneurship and long-term economic growth.”