‘It’s brutal, they feel very attacked’: budget uncertainty hits Southampton boat show

“What would happen if red wine got on that?” It is a common enough question when perusing a carpet store. But, as it happens, the same query crops up when shopping for a yacht. “Oh, you’d never get it off that decking,” the other half of a young couple replies as they size up one of the £2m triple-decker yachts moored at the recent Southampton international boat show. Top boat manufacturers descended on the port city from across Europe to show off bigger, better and bolder yachts than ever before, as well as lines of smaller sailing and motor boats. But the show, once a must-attend of the season alongside exhibitions in Cannes and Monaco, has shrunk by about 30% this year, according to some vendors’ estimates. Some of the changes were part of an effort to cut the show’s costs, but it is not difficult to see why it might be smaller this year: flags advertising advice on inheritance tax and pensions blow in the wind, and chatter about the government’s budget this month swirls around the pontoons amid fears that higher taxes will curb wealthy buyers’ spending power. As Rachel Reeves examines ways to repair the public finances, she has said those with the “broadest shoulders” should pay their “fair share”. The exact method the chancellor will use to tax the wealthy is unclear. Reeves has previously ruled out imposing a new “wealth tax” but other options have been floated including raising the rate of capital gains tax; levying national insurance on rental income and creating higher council tax bands. Bill Stringer, of the boat broker Key Yachting, says sales are harder than ever to secure this year. “We are in a soft spot,” he says. “There is a lot of uncertainty in the world. Clients do have money but they are more cautious and the budget is on people’s minds.” Sales of vessels under 50 metres are down 12%, driven by a sharp drop in sailing yacht sales in the 30- to 40-metre range, according to SuperYacht Times. Sales of motor yachts between 30 and 40 metres are flat. Stringer adds: “Buyers are delaying because they want to see what happens in the budget. We have had a couple of people say they were going to sell their business at the beginning of the year, but they are going to push it back. “Sales are hard to come by, but possible. It is not availability of money, it is uncertainty that stops people from making decisions.” ‘Sod it – let’s buy a boat’ Pressure is building in some corners of the UK’s luxury boat market, too. Princess, which is based in Plymouth, and its Poole-based rival Sunseeker International are the leaders in sector – and last year the former laid out plans to cut its hourly paid workforce by about 260 roles. Its chief executive, Will Green, told employees that 2024 had been “the most challenging commercial conditions in the company’s history”, and that Labour’s first budget had “severely impacted” its recovery plan. Now, as the industry braces for Labour’s second budget, marketing to the millionaires shopping at the Southampton show is critical. About 90,000 visitors came to the show over the course of 10 days, a mix of hobbyists and serious buyers, who tour the yachts lined up on the pontoons. These are imposing vehicles, several close to 30 metres long, with most kitted out with luxurious double bedrooms, en suite bathrooms, marble-top kitchens and huge media units. The sector says it contributes £4.7bn gross value to the UK economy – and at the show it is easy to see why. The crowd has some big spenders among it: a pro doing flips on a jetski draws in a group of middle-aged men eyeing up a potential new toy. A shipyard stage brings live music to the show each day, as well as food trucks and a Guinness bar. It certainly helps to keep the mood buoyant. Phil Dollin, of Inspiration Marine Group, one of the biggest boat dealerships in the UK, says that even with concerns mounting over tax, there are still some buyers willing to take the plunge. His group represents Privilege Catamarans, as well as Hanse, Dehler and Moody sailing yachts. “When there is a change of government policy, it tends to be fairly negative towards the higher net worth individuals, and they get nervous and hold on to their money,” he says. “But then another year goes by and it dawns on them they have only gotten older. We now seem to be at that stage: they’re thinking, sod it, let’s just get on with it.” Dollin, whose average sale is worth about £400,000, says it is changes to inheritance tax on pensions that has most upset his buyers, most of whom are aged between 60 and 70 years old. From April 2027, defined contribution pension pots will be pulled into the IHT net. “It is brutal,” he says. “They are feeling very attacked. There is definitely ill feeling towards the tax regime at the moment.” A cap on how much people can give as gifts before they pay inheritance tax – currently not applicable if the donor lives for a further seven years – is reportedly being considered, which could affect boat owners. However, mooted higher property taxes could still make boats an attractive proposition for consumers looking to invest a lump sum. Still, boats are complicated assets to manage: when buying a yacht in the UK, the primary taxes are VAT and customs duty, which can vary depending on where you buy the vessel and where you intend to use it. Luckily for UK yacht owners, the EU has a “temporary admission” scheme where boats that paid UK VAT can cruise in EU waters for up to 18 months at a time without incurring European VAT on the boat itself. But like cars, yachts gradually depreciate in value, though typically at a slower rate. In 2024, the price for a used yacht of more than 30 metres dropped by 7.9% on average, according to SuperYacht Times. The budget also isn’t the only factor deterring buyers. “We did not think that the cost-of-living crisis and higher interest rates would have affected the market, but it seems to have done,” Stringer adds. “The other driver is that new boat prices have gone up dramatically in the past five years – back in 2010, a dentist, lawyer or headteacher could buy a boat out of their salary. Now you either have to have someone die, or sell your business.” Cash buyers aboard There is, however, an elite group of buyers who can simply afford to shoulder a higher tax bill as well as a brand new boat. Stuart Brotherton, a sales network director at Ancasta, one of the biggest marine brokers in Europe, says the group has had its best September ever for sales, securing more than €20m (£17m) from the Cannes and Southampton shows combined. The group sells across a wide spectrum of models, with yachts ranging from €15,000 to more than $22m. “Sales have been across all of our brands, right from a small Beneteau sailing boat to agreeing a deal for a 30-metre (96ft) Sanlorenzo,” he says. The luxury yacht costs more than £4m. “Some people do get carried away. They get boat show fever, then speak to their accountant and realise it is the wrong time to pull out a load of money. “Sometimes we can get them to take out finance, but some people are just against borrowing money.” Most of the serious shoppers perusing the show are cash buyers, Stringer says. “There is loads of marine finance around but it is super expensive, I don’t know why anyone would do that,” he says. “It is a complex affair buying a boat. It is very emotional, and family, partner, finance – all of that needs to fall in place.”