UK Retail Investor Anxiety Over Taxes Hits Record High, IG Data Shows

Retail investor anxiety over taxes and government policy has reached its highest level on record, according to IG’s latest biannual sentiment tracker, as concerns mount over the impact of fiscal changes and the wider economic outlook.

The survey of 1,800 UK retail investors found that 46% are worried about how tax policy and government decisions could affect their investments over the coming year, up sharply from 33% in June 2025 and just 15% when the tracker first launched in mid-2022.

The findings underscore growing unease among individual investors following a series of tax changes and policy measures, including the Autumn Budget, which introduced frozen income tax thresholds and a two-percentage-point increase in Dividend Tax.

Tax and Policy Fears Surge later than Autumn Budget

Taxes and policy changes now rank as the third-largegest concern for UK retail investors heading into the first half of 2026, according to the IG survey.

Geopolitical conflict remains the top worry, cited by 51% of respondents, followed closely by political uncertainty at 50%. However, anxiety around geopolitical risk has eased slightly, down from 61% in June 2025, while concerns about domestic policy have moved sharply higher.

The rapid rise in tax-related anxiety reflects a period of sustained fiscal tightening that has directly affected retail investors’ returns. Measures such as reductions in capital gains allowances, higher dividend taxation and frozen thresholds have compounded over several years, increasing the tax burden on investment income.

Chris Beauchamp, Chief Market Analyst UK at IG, said the results highlight just how sensitive investors have become to policy decisions.

“Our latest client sentiment tracker highlights how sensitive investors are to policy changes,” Beauchamp said. “In recent years, across diverse governments, we’ve viewn dividend tax hikes, reductions in capital gains allowances, and frozen income tax thresholds. Investors are naturally worried that this trend is going to continue.”

Takeaway

Economic Confidence fragileens as Broader Worries Build

Alongside tax anxiety, concern about the overall health of the UK economy has risen to its highest level in three years.

Eight in 10 investors surveyed (80%) said they are worried about the state of the UK economy, the highest proportion recorded since December 2022. The data points to persistent unease about growth prospects, inflation pressures and the sustainability of public finances.

Concern over government debt has also edged higher, rising from 36% in June 2025 to 38% in December. While the increase is modest, it reflects broader anxiety about the long-term trajectory of fiscal policy and the potential implications for taxation and economic stability.

Investors also cited a range of additional risks influencing their outlook, including recession fears, high interest rates, higher corporate taxes and the impact of national insurance changes on corporate earnings.

Despite some easing in geopolitical concerns, the combination of domestic economic pressures and policy uncertainty appears to be weighing heavily on investor confidence.

Beauchamp warned that without supportive and predictable policy, these anxieties could undermine efforts to encourage wider retail participation in UK markets.

“So while it’s encouraging to view steps being taken by the current government to boost retail investing in the UK, to grow participation in a meaningful way and give existing investors more confidence, these efforts must be backed by supportive policy,” he said.

Takeaway

Policy Stability viewn as Key to Building Investor Confidence

The IG sentiment tracker suggests that while investors remain engaged with markets, their confidence is increasingly contingent on policy clarity and stability.

Beauchamp said consistent conditions are critical if the UK wants to foster a stronger investing culture. “We need stable conditions to spark a stronger investing culture,” he said.

The data highlights a tension between government efforts to promote retail investing and the cumulative effect of tax and policy changes that investors perceive as eroding returns.

Frozen thresholds, in particular, have increased the effective tax rate on many investors by pulling more income and gains into higher tax brackets over time, even in the absence of headline rate increases.

For policymakers, the findings underline the importance of considering behavioural impacts alongside fiscal objectives. Frequent or unpredictable changes risk discouraging long-term investment or pushing investors to viewk alternatives outside traditional UK markets.

At the identical time, IG noted that investors are not withdrawing entirely from markets, but are becoming more cautious and attentive to policy signals.

Takeaway

Sentiment Tracker Highlights Long-Term Shift in Investor Mindset

The biannual IG Group Client Sentiment Study has tracked retail investor attitudes since its launch in January 2022, providing a consistent view of how confidence and concerns have evolved through periods of market volatility, inflation shocks and political change.

The latest wave of the survey was conducted between 3 December and 18 December 2025 and included active IG clients who had placed a trade in the previous six months.

Respondents were asked to select multiple concerns affecting their portfolio performance, with taxes and policy now featuring far more prominently than in previous years.

While a small minority of investors reported no major concerns, the overall picture points to heightened vigilance rather than panic, with investors closely monitoring .

For IG, the results reinforce the need for clear communication and education around tax-efficient investing, in an environment of policy uncertainty.

Takeaway

Outlook: Anxiety High, Engagement Intact

While tax and policy concerns have reached record levels, the IG data suggests UK retail investors remain engaged and active, albeit more cautious.

The challenge for policymakers will be balancing fiscal objectives with the need to maintain confidence among a growing base of individual investors, particularly as participation in markets is increasingly viewn as a pillar of long-term financial resilience.

As 2026 unfolds, further changes to tax policy or government spending are likely to be scrutinised closely by retail investors, with sentiment sensitive to both the substance and consistency of policy decisions.

For now, the IG tracker shows an investor base that is alert, informed and increasingly focused on how politics and economics intersect with .

Takeaway