Wealthy UK investors are increasingly turning to buy-to-let property and higher-risk tax-advantaged schemes once they have exhausted their ISA and pension allowances, new research suggests.
A survey of 3,092 UK adults with investable assets of up to £2.5m, conducted by Rathbones, indicates that portfolio behaviour shifts markedly at higher wealth levels.
Investment in buy-to-let property rises sharply as wealth increases. Just 4 per cent of those with £25,000 to £250,000 in investable assets hold rental property, compared with 35 per cent of those with more than £2.5m.
A similar pattern is evident in allocations to Venture Capital Trusts (VCTs) and the Enterprise Investment Scheme (EIS), both of which offer tax incentives in exchange for backing higher-risk private companies. Participation in these schemes rises from 2 per cent at the lower end of the wealth spectrum to 25 per cent among the wealthiest respondents.
A spokesperson for Rathbones said that once clients have maximised tax-efficient wrappers such as ISAs and pensions, the focus often shifts to where additional capital can be deployed. “The right route depends on time horizon, risk tolerance and personal tax circumstances,” they said, cautioning against allowing tax considerations alone to drive decisions.
The research also points to increasing use of alternative and higher-risk assets as wealth grows. Exposure to peer-to-peer lending, cryptocurrencies and unquoted shares climbs from 5 per cent among those with up to £250,000 in investable assets, to 25 per cent among those with more than £2.5m.
Use of taxable investment accounts holding shares, bonds and funds also rises steadily with wealth. More than two-thirds of investors with £500,000 to £1m in investable assets hold such accounts, compared with 31 per cent in the lowest wealth bracket.
Despite the tilt towards property and higher-risk vehicles, cash remains a central feature of UK portfolios. Some 94 per cent of respondents hold savings accounts or Premium Bonds, with the proportion rising to as much as 97 per cent among the wealthiest.
The findings suggest that while affluent investors are more willing to embrace complexity and risk in pursuit of returns and tax efficiency, liquidity and capital preservation continue to play a significant role in portfolio construction.
With tax thresholds frozen and allowances increasingly constrained, wealth managers expect demand for property and specialist investment schemes to remain robust among high-net-worth clients seeking the next outlet for capital.
