The deep divides in perceptions of wealth

Investors are regularly encouraged to diversify their investments. We believe the same approach should be used for tax allowances. Beckie Williams explains why.
Published 10 September
5 mins

As the economic impact of the coronavirus pandemic continues to be revealed, the world has seen debt levels rise to the extent that they are already at levels surpassing the previous record post World War II when measured as a percentage of GDP1.

This is important as it means governments need to control the cost of that debt. This has significant implications for investors in terms of the potential returns from their investment portfolios as interest rates are unlikely to rise anytime soon. However, it also means that governments will need to bring down those levels of debt – typically achieved by raising taxes.


The UK provides a good example of the circumstances facing many governments. The Chancellor of the Exchequer, Rishi Sunak, is already on the record that the November 2020 Budget is likely to see tax increases2. But how does he achieve this?

The most financially rewarding approach would be to make small changes on the taxes yielding the most for the Treasury, but these would likely be the most difficult politically. National Insurance, income tax and VAT contribute some two thirds of UK tax revenues3, and also affect the most people.


Instead, there is a view that the burden should fall heavily on ‘those with the broadest shoulders’. It’s an easy pick given there are far fewer people who would be upset, and may be the least damaging to the party in power as they are represented by a relatively low number of parliamentary seats. A study a year ago by the Institute for Fiscal Studies (IFS) flagged that there are only 310,000 individuals in the top 1% income tax bracket in the UK and just 65 of the 650 parliamentary constituencies have the highest density of people in that top 1%.

The recent publication of a book called “The Rich in Public Opinion: What We Think When We Think About Wealth“, by the often controversial historian and sociologist, Dr. Rainer Zitelmann, meanwhile, helps explain why the notion that the burden should fall on the most wealthy gets so much media attention, as well as being politically expedient.


The basis of his book is research run in 2018 by Ipsos Mori in the UK. It highlighted the breadth of views that different sections of society hold about the wealthiest individuals among us and whether their wealth is ‘deserved’. Here, we show the views based on different age groups for some of the sources of wealth covered by the survey to show the disparity of views between the population as a whole and different demographic segments.

Q6. Some say that certain people deserve to be rich while others are undeserving. Which, if any, of the following groups of people do you personally believe deserve to be rich?


GB | All ages

GB | Under 30s

GB | Over 60s





Self-employed people




Creative people and artists (e.g. actors, musicians etc.)




Lottery winners








Financial investors




Senior management




Property investors








Source: Ipsos Mori, n=988 adults, aged 15+, data weighted to the known population profile.

While entrepreneurs and business owners are deemed to be the most deserving of their wealth, the numbers drop fairly quickly. Heirs seem to be the least worthy, but investors – who take risks too – also get low scores.


Meanwhile, another finding from the survey highlighted that 28% of low earners, versus only 12% of high earners, viewed the rich’s wealth as being mainly due to good luck.

But even if the broadest shoulders argument prevails, what is the best mechanism? The top 1%, after all, already pay 27% of all income tax4. It’s a ‘top heavy’ tax, i.e. the richest pay the most disproportionally. Meanwhile, there are less top heavy taxes, in particular capital taxes. This ‘category’ includes capital gains tax, inheritance tax and stamp duty land tax.


Even before the pandemic, in fact since 2010, there was already a central government view that these taxes should become significantly more important for the Treasury over time4. It helps explain why, in 2016, there was an additional 3% stamp duty levied on investment properties and second homes.

IFS projections in 2017 showed that by 2021–22, the share of revenue that capital taxes account for would have almost doubled relative to 2010. While the stamp duty tax holiday will have put a dent in these projections, the writing on the wall should be clear: the aim of the government will be on more successive changes across a broader number of taxes and specifically on the smaller ones.

The Chancellor chose not push through the changes proposed by the Office for Tax Simplification (OTS) on inheritance tax in 2019. However, attitudes towards wealth being accumulated through luck rather than hard work mean that we cannot be so sure that the recent request to the OTS to review capital gains tax will end in the same outcome. Investors are, after all, deemed among the least worthy of their wealth.


As such, it may also be a relatively safe approach. There was no big backlash to the cut in entrepreneurs’ relief from £10 million to £1 million over a lifetime, despite nearly half the UK population believing entrepreneurs ‘deserve’ their wealth.

What does that mean for our clients?

A lot of our updates on investments flag the need for diversification as a route to mitigate risk. We believe investors should also seek to diversify their use of tax allowances and structures too. I want to encourage clients to speak to their private banker about getting a wealth plan in place.


While Nedbank Private Wealth does not provide individual tax advice, we can work in conjunction with legal or tax advisers, and support the use of tax efficient investment vehicles with the aim to use all of the appropriate allowances available to them, based on their individual circumstances. The more diversified the approach, the more likely it is that clients could follow a similar path in the future and not have to make significant changes to their tax planning over the years.


Meanwhile, the 2019 IFS report revealed another interesting statistic about the UK’s tax base: the top 1% of income tax payers are not a stable group – a quarter of those in the top 1% in one year will not be there the next. After five years, only half will still be in the top 1%. As such, perhaps it is a good idea to protect the wealth you have and ensure it is not just invested efficiently, but structured efficiently too, whether you are based in the UK or elsewhere.

Clients of Nedbank Private Wealth can get in touch with their private banker directly to understand how we can help clients plan and structure their finances to protect and grow their wealth, and be able to transfer it to future generations. Or call +44 (0)1624 645000 to speak to our client services team.


If you would like to find out more about how we can help you with wealth planning support, please contact us on the same number as above, or complete the contact us form using the link towards the end of the page.

Sources: Nedbank Private Wealth and (1) IMF; (2) Reuters; (3) HMRC; and (4) IFS.


Any examples of investments and structures used are for illustrative purposes only. The information does not constitute an invitation or inducement to buy any financial investment or service. None of the content constitutes advice or a personal recommendation. Individuals should seek professional advice, based on their jurisdiction and personal circumstances, before making any financial decision.

about the author

Beckie Williams

Beckie Williams

Beckie is responsible for managing and developing Nedbank Private Wealth’s product and service proposition across our full suite of wealth planning advice, investment management, banking, and online and digital services. She also has responsibility for our marketing and business assurance teams.


Beckie has more than 30 years’ client-facing experience in the banking industry, both in the UK and the Isle of Man. Prior to taking up her client proposition role, Beckie managed our Isle of Man-based private banking team, responsible for delivering excellent service and advice to a range of private clients, corporate trustees and intermediaries.


Beckie is a Chartered Fellow of the Chartered Institute for Securities & Investment.

Access more of our insights


Never mind the gaps: plan for financial independence

9 Mar

   |   3 mins

With a theme of #EmbraceEquity for International Women’s Day 2023, Anna Slater discusses what it means and the significant role it can play in understanding and meeting women’s financial needs.

Money management

Our top 10 insights from 2022

24 Jan

   |   2½ mins

No new year can ‘officially’ start until our obligatory list of top articles and insights! For many of us, 2022 continued to be a challenging year. Amidst the ongoing coverage of conflict, climate concerns and more, there were, however, some brighter notes during the year.

Major life events

Building a financial future after divorce

9 Jan

   |   4 mins

The first working Monday of the new year is said to be the busiest day for divorce lawyers but going through a divorce can be an emotional upheaval at any time of the year. Huw Williams examines eight steps you can take to start getting your life in order and planning for the future.

Money management

5 steps to plan for 2023: A new year, a new start

14 Dec

   |   5 mins

The events of the past 12 months seem only to have further highlighted the need to plan ahead. We suggest five ways to get your finances in order – while keeping the unexpected in mind.

Get in touch

If you are interested in becoming a client, please complete the form via the ‘become a client’ button below. Alternatively, if you are already a client, or if you have a question about how we help clients in particular circumstances, please use the ‘contact us’ button.


We will get back to you as soon as we can during office hours, which are Monday to Friday, 8am to 8pm (UK time), except for UK public holidays.

Become a Client

Thank you for your interest in Nedbank Private Wealth. Please call us on +44 (0)1624 645000 or complete the requested information and one of our team will get back to you soon. We look forward to speaking with you.  Please note: If you are an EU resident, we are unfortunately unable to offer our services to you at present.

* Required fields

Contact Us

Please call us today on +44 (0)1624 645000. Our office hours are weekdays from 8am to 8pm (UK time), except for UK public holidays.


Or please complete and submit the below form and one of the team will get back to you as requested.

* Required fields

Search suggestions