How the super-rich protect their money from Labour: Tax advisers and wealth managers reveal six clever ways you can do the same as your clients

Britain’s richest households rushed to make swift but radical changes to their finances ahead of the general election, fearing the spectre of a Labour tax raid, from increases in capital gains tax and the end of generous pensions to an attack on treasured family inheritances.

Tax advisers and wealth managers working with some of the richest households tell The Mail on Sunday exactly what those in the know have been doing behind the scenes.

Sell ​​your shares to avoid affecting capital gains

In recent weeks, wealthy individuals have been selling off equity investments amid concerns that Labour will target capital gains tax to raise money.

In the run-up to the election, Finance Minister Rachel Reeves said her party had no current plans to increase CGT, but did not rule out raising the level over the full term of the Labour government.

Chris Shepard, a partner at wealth management firm Evelyn Partners, says non-residential property tax rates have been stable for some time and could be viewed as modest by Labour.

“Most people I speak to accept that there is a strong likelihood that personal income tax rates will rise and we can assume that they probably will. We don’t know when that will happen, but people may not have the luxury of waiting until it is announced,” he says.

This is because changes to capital gains tax rates have historically been introduced mid-year, meaning the reform could come into effect immediately. Shepard says: “I already have several clients who, prior to the election, had decided to sell their assets.

‘For example, some clients who had invested in stocks on the Magnificent Seven US stock exchanges and had made significant profits over the past few years are now saying that it is a good time to take money out of those stocks and cash out the profits. Instead, they will hold the money in cash for a while.’

The Magnificent Seven is the nickname commonly used among investors to describe a group of top-performing technology stocks: Microsoft, Apple, Nvidia, Alphabet, Amazon, Meta and Tesla.

Act now to get the most out of your properties

While stock market investments can be sold quickly, the same cannot be said for real estate assets.

However, this means some wealthy families are taking urgent steps to put properties up for sale in the hope of making a profit before Labour can make changes to the current CGT rules.

Shepard says: ‘Several people I know who have invested in more than one property, either as a holiday home or rental, have made arrangements to sell them.’

Labour has indicated that there will be greater pressure on homeowners than there has been so far. “A number of people have made the decision to sell their property investments as a result,” adds Shepard. “The regulatory burden that is going to be placed on homeowners is such that people say they no longer want to be part of it.

‘Generally speaking, tax rates are not likely to fall and so if a client is considering an event that will result in a tax burden, there is no point in delaying it. But the tax tail should not wag the dog.’

Pay school fees in advance to avoid VAT charges

Grandparents who pay their grandchildren’s private school fees are making payments for future terms in advance in a desperate attempt to mitigate Labour’s VAT plans.

Sir Keir Starmer plans to start charging VAT on private school fees, adding 20 per cent to the total bill for thousands of parents and grandparents.

Shepard says several grandparents have already been making lump sum payments to schools to avoid the VAT increase.

However, he advises caution in this regard, as any changes could have retroactive effects, so efforts to pay early might not make any difference.

Michelle Holgate, director of financial planning at RBC Brewin Dolphin, says a number of her clients have also been asking about the possibility of making early payments.

“We have received an increase in requests from grandparents seeking to fully or partially fund school fees to help their children. For some, this is in addition to the help they received to buy a house and other needs.”

Leaving the UK and adopting a non-domiciled life

Experts warn that wealthy households are also fleeing Britain for fear of Starmer’s tax raids.

Jason Porter of Blevins Franks, a financial advisory firm specialising in cross-border wealth management, says there has been an influx of calls from families planning to move out of the UK ahead of the election.

He says: “Certainly a lot of people came to us with serious concerns about the changes to capital gains tax and inheritance tax and what their situation might look like shortly if they stayed. In most cases these were middle-income people, with a couple of million pounds, who may find it takes time to move their assets.

“Many are thinking of going to Cyprus or Malta, which are very attractive from a personal income tax point of view and where it is easier to get visas. It is not the place they would go to, but they can stay there for a few years and sell their assets.”

Shepard echoed this, saying that “non-domiciled” clients have said they are considering moving abroad because it is “the best way for them to not be exposed to UK tax”. The term “non-domiciled” refers to a person who lives in the UK but is not legally domiciled here, which can mean they retain tax advantages in their country of residence.

Robert Brodrick, a private client partner at law firm Payne Hicks Beach, agrees that from a private wealth perspective, the focus is on non-domiciles, and these individuals have been leaving the country.

‘The only thing that both advisers and clients are hoping for is some certainty, because since the Conservatives announced their intention to abolish non-domiciled status, something that Labour has pledged to pursue, international clients have been left in the dark, trying to make decisions without knowing whether the changes that have been announced will become law.’

Brodrick says non-domiciled people who contribute hugely to the economy are “definitely” moving to Italy. “It’s not the fact that they will have to pay more taxes that makes people leave, but the uncertainty that makes planning impossible. Once they have left, they are unlikely to return until they know it is safe to do so.”

Increase your pension while you still can

In a key pledge in its manifesto, Labour promised to reform pensions, sparking fears among many that the new government could begin to cap the amount of money that can be put into pensions each year.

Currently, it is possible to pay up to £60,000 into a pension each year, known as an “annual allowance”.

Similarly, the amount of tax relief you receive for every £1 you contribute to your pension could be reduced. Currently, you receive tax relief on any money you contribute at your marginal rate of income tax. This means, for example, that a basic rate taxpayer receives 20 per cent tax relief on any money put into their pension, a higher rate taxpayer receives 40 per cent and a higher rate taxpayer receives 45 per cent.

Shepard says some wealthy clients have been maximising the amount they are contributing to their pensions in case any of these changes are made. “Some tell me they want to receive all their contributions before this tax year,” he says. This is to ensure they can maximise their current allowance, but also receive the higher and additional rates of tax relief while they are still in place.

Find ways to avoid any inheritance tax assault

Inheritance is a key battleground for wealthy individuals, who go to great lengths to protect their assets from the taxman.

According to Shepard, speculation about the coming changes has prompted the wealthy to take preemptive action. “Families who own a business have been gifting shares in the company to younger generations through a trust. They are making these inheritance gifts early to be tax-exempt, allowing them to get an inheritance tax exemption for businesses.”

Nick Ritchie, senior director of estate planning at RBC Wealth Management, says: “Those who have decided that the new Government will increase taxes, including increasing the scope of CGT and IHT, are already accelerating asset disposal, gifting or relocation.”

Did you make any changes to your finances before Labour’s victory? Email jessica.beard@mailonsunday.co.uk