What Does “Cash Poor, Asset Rich” Mean?
The phrase cash poor, asset rich describes a financial position that is far more common than most people realise. You have significant wealth — a home worth £800,000, perhaps, or an investment portfolio, farmland, a business, or a collection of valuable possessions — but very little of it is available as liquid cash.
On paper, you are wealthy. In practice, you may struggle to cover a large, unexpected expense. And when that expense is a six-figure tax bill from HMRC with a hard deadline, the situation can become genuinely stressful.
This is not a niche problem. According to the Office for National Statistics, the median UK household holds roughly 40 % of its total wealth in property. For many homeowners — particularly those in London, the South East, and popular rural areas — that proportion is far higher. When you add pension wealth (which is largely inaccessible until age 57) and business assets, liquid savings often represent a thin sliver of the overall picture.
Who Is Affected?
The stereotypical image of an “asset-rich” person is a retiree sitting in a large family home they bought decades ago. That is part of the picture, but the reality is broader. People who commonly find themselves asset rich and cash poor include:
- Homeowners in high-value areas who bought before the property boom. A house purchased for £120,000 in the 1990s may now be worth £900,000, but the owner’s income and savings have not grown at the same rate.
- Business owners whose personal wealth is locked in the value of their company. Until the business is sold or dividends are drawn, that wealth is inaccessible.
- Landowners and farmers with significant agricultural holdings but limited cash flow, particularly those affected by the 2024 changes to Agricultural Property Relief.
- Inheritors who have received property, art, or other assets but now face an inheritance tax bill that must be paid in cash.
- Professionals with large pension pots who have maximised their pension contributions but hold little outside of tax-deferred wrappers.
- Collectors and enthusiasts who own valuable watches, fine wine, classic cars, or art — assets that are not easily or quickly converted to cash.
What unites all of these groups is a mismatch between total wealth and available liquidity. And UK tax rules can make that mismatch painful.
The Liquidity Squeeze: Why It Is Getting Worse
Three forces are combining to make the cash-poor, asset-rich problem more acute than ever before.
1. Frozen Inheritance Tax Thresholds
The inheritance tax nil-rate band — the amount you can leave free of IHT — has been frozen at £325,000 since 2009. It will stay frozen until at least April 2028. Use our free IHT calculator to estimate your exposure. Meanwhile, average UK house prices have risen by more than 60 % over the same period.
The result is fiscal drag: each year, more estates are pulled above the threshold. HMRC collected a record £7.5 billion in inheritance tax in the 2024/25 tax year, and that figure is projected to keep climbing. Many of those estates belong to ordinary families whose main asset is the family home.
2026/27 Budget Changes
2. The IHT Timing Problem
Inheritance tax must normally be paid within six months of the date of death. But probate — the legal process that gives executors access to the deceased’s assets — often takes longer than that. The average probate timeline in England and Wales is currently around 10 to 16 weeks, but complex estates can take much longer.
This creates a painful gap. The tax is due, but the money is locked inside the estate. Executors may need to find hundreds of thousands of pounds from their own resources, arrange a bank loan, or negotiate with HMRC for instalment payments. For property-heavy estates, HMRC does allow IHT to be paid in annual instalments over ten years, but interest is charged from day one.
3. Capital Gains Tax on Disposal
Even when selling an asset is an option, capital gains tax can take a significant slice. The main CGT rates for 2025/26 are 18 % for basic-rate taxpayers and 24 % for higher and additional-rate taxpayers on residential property gains (and 10/20 % on other assets). If you are forced to sell under time pressure, you may also accept a below-market price — a double hit.
The combination of IHT, CGT, and time pressure can erode a substantial share of an estate’s value. That is why planning ahead matters so much.
Solutions: How to Unlock Liquidity Without Selling Your Assets
The good news is that being asset rich and cash poor is a well-understood problem, and there are several legitimate strategies to address it. Below is an overview of the main options — for a condensed comparison, see our overview of liquidity strategies. Each option links to a dedicated guide where we cover the details.
Asset-Backed Finance
The most direct solution is to borrow against the value of your assets rather than selling them. Specialist lenders offer loans secured against property, investment portfolios, insurance policies, and other valuable holdings. Typical loan-to-value ratios range from 50 % to 75 %, and terms can be flexible — from bridging finance of a few months to longer-term facilities.
This approach is particularly useful for executors who need to pay an IHT bill before probate is granted. A short-term loan can bridge the gap, and once probate completes the loan is repaid from the estate.
Read our full guide to asset-backed finance →
Luxury Asset Finance
If your wealth includes high-value personal possessions — fine watches, jewellery, wine collections, classic cars, or art — specialist lenders can advance cash against these items. Unlike selling at auction (where buyer’s and seller’s premiums can total 30 % or more), borrowing against luxury assets lets you retain ownership and avoid crystallising a CGT event.
Loan terms typically range from three to twelve months, with LTV ratios of 50–70 %. The items are stored in secure, insured vaults during the loan period.
Read our full guide to luxury asset finance →
Family Investment Companies
A Family Investment Company (FIC) is a private limited company used to hold and manage family wealth. By transferring assets into a FIC and issuing different classes of shares to family members, you can achieve several objectives at once: retaining control of the assets, generating income that is taxed at corporate rates (currently 25 %), and gradually transferring value to the next generation in a tax-efficient way.
FICs are a long-term planning tool, not a quick fix. They work best when set up well in advance of any IHT event and when the family has assets worth at least £500,000 to justify the setup and running costs.
Read our full guide to Family Investment Companies →
VCT Tax Relief
Venture Capital Trusts (VCTs) are listed funds that invest in small, high-growth UK companies. For the investor, they offer a powerful combination of tax reliefs: 30 % income tax relief on investments up to £200,000 per year, tax-free dividends, and no capital gains tax on disposal — provided the shares are held for at least five years.
VCTs are not a direct liquidity solution, but they can be a valuable part of a wider strategy for reducing your overall tax burden and generating tax-free income. They are higher risk than mainstream investments, so they are best suited to experienced investors or those taking professional advice.
Read our full guide to VCT tax relief →
Inheritance Tax Planning
The most effective way to avoid a liquidity crisis at death is to plan ahead. There is a range of legitimate IHT planning strategies, from straightforward steps that cost nothing (like using your annual gift exemptions) to more sophisticated approaches involving trusts, insurance, and business relief.
Key strategies include: making use of the £325,000 nil-rate band and £175,000 residence nil-rate band, gifting assets during your lifetime (which fall out of your estate after seven years), writing a whole-of-life insurance policy in trust to cover the expected IHT bill, and investing in assets that qualify for Business Property Relief.
Read our full guide to inheritance tax planning →
HMRC Payment Plans and Instalment Options
If you are already facing a tax bill you cannot pay, HMRC offers several options. For inheritance tax on qualifying assets (property, land, certain shares), you can apply to pay in annual instalments over ten years. Interest is charged, but the rate is lower than most commercial loans.
For income tax and capital gains tax debts, HMRC’s Time to Pay arrangement allows you to spread payments over up to twelve months. You will usually need to call the HMRC payment support line, explain your circumstances, and propose a realistic payment schedule.
Read our full guide to paying a tax bill without selling assets →
Start Planning Early
When to Seek Professional Help
You can manage some aspects of tax planning yourself — using your annual gift exemptions, for example, or checking whether your estate falls within the nil-rate band. But there are situations where professional advice is not just helpful, it is essential:
- Your estate (including your home, pensions, and any gifts made in the last seven years) is likely to exceed the available nil-rate bands.
- You are considering setting up a trust, a Family Investment Company, or any other structure to hold assets.
- You need to borrow a significant amount against your assets and want to compare commercial lending options.
- You own a business or agricultural land and are unsure whether Business Property Relief or Agricultural Property Relief will apply to your estate after the 2026 changes.
- You are an executor dealing with an estate that has an IHT liability and limited liquid funds.
- You are a non-UK domiciled individual navigating the remittance basis rules.
A qualified tax advisor or solicitor can map out your complete financial position, identify reliefs you may be missing, and build a plan that balances tax efficiency with your personal goals. The cost of advice is almost always dwarfed by the tax it saves. If you are unsure where to start, our advisor matching service can connect you with a specialist for free.
Regulatory Note