With less than a month to go until the UK's general election on 7 May and the polls showing no outright frontrunner, wealth managers are trying to make sense of the uncertainties.

In what has been one of the toughest-to-call UK general elections of recent years, the rich have been busy weighing up what the parties' respective pledges mean for their wealth – and coming to no clear conclusion.

As the Conservative and Labour parties narrowly skirt each other day by day in opinion polls, the outcome of a weak coalition government is shaping up to be a likely one. This means no scenarios can be entirely shrugged off when debating post-election outcomes.

Pre-election jitters are widespread – even more so than before the 2010 election or in the run-up to last year's Scottish referendum.

Labour has made a fanfare of new punishments for tax dodgers and the so-called “mansion tax” on homes worth more than £2 million ($2.94 million). Meanwhile, the Conservatives have latched onto the pledge of an elevated inheritance tax threshold, a reckoned vote-winner.

Fears of a “Brexit” have swirled around the prospect of a Conservative-led government following the party's pledge for a referendum on the UK's membership of the European Union.

As they pile on the promises but hold back on details, the uncertain post-electoral landscape comes with an "I'll-believe-it-when-I-see-it" attitude. And with post-election horse-trading now a probability, Scottish National Party and even UKIP policies call for consideration.

The main defection channels are those of former Conservative voters - and some Labour voters - shifting to the United Kingdom Independence Party (UKIP) and of Labour voters shifting to the Scottish National Party, but there will be exceptions to those, according to head of investment strategy at Investec Wealth & Investment, John Wyn-Evans.

"The Labour and Conservative parties are now as far apart in policy terms as they have been since the 1992 election, when the Tories unexpectedly held onto the reins of power. Labour promises greater redistribution of wealth and less austerity, while the Conservatives remain a more 'market-friendly' choice," he said.

"However a vote for the Tories is effectively a vote for a referendum on the UK’s membership of the European Union. If Labour needs the help of the SNP to gain a majority, then that will raise the prospect of yet another Scottish referendum."

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Labour-centric scenarios

Labour leader Ed Miliband last week shook wealth managers out of their lukewarm stance towards the election when he announced plans to scrap the UK's “non-dom” tax status – the status that allows foreign residents to limit their tax bills on overseas earnings; the status has reeled in wealthy foreigners, without which they might be deterred from staying and contributing to the economy.

“All non-doms will be praying that Labour do not form the next government,” said James Quarmby, head of private wealth at Stephenson Harwood. “I have already heard from a few of my non-dom clients and they are planning to leave (and therefore close their UK family office operations) if Labour wins.”

In its steps to restrain the UK's bulging budget deficit, Labour has decided the wealthy should bear the brunt of the tax burden and the 50p income tax rate for those earning £150,000 is set to go ahead if they come to power.

The proposed introduction of a mansion tax has – to put it mildly – unsettled the affected demographic who ridicule the tax as another opportunistic tax on wealth and predict it will paralyse the city's prime and super-prime property markets. (Prices in the prime central London market already slackened to 0.2 per cent between January and March this year, according to Knight Frank.)

The tax is also a threat to businesses contingent on the high-end UK property market, such as London-listed housebuilding company Berkley Group and estate agents such as Savills and Foxtons, according to Matthew Tillett, UK equities portfolio manager at Allianz Global Investors.

“At the moment this [prime London property] market is lifeless, awaiting the election result. If Labour wins then expect to see real price drops as non-doms leave the UK and liquidate their holdings and other people are put-off this sector because of mansion tax,” said Quarmby.

Conservative

The idea of a Conservative-led government is generally a more comforting one to the high net worth population. The party's pledges include an escalated income tax threshold for 40p higher rate taxpayers from £41,900 to £50,000 by 2020, as well as an increase of the inheritance tax threshold to £1 million.

The rich have long attacked inheritance tax as a “double tax” and wholly welcomed the proposed threshold hoist – a pledge the Conservatives have made a political priority – but they are taking it with a pinch of salt. Remember, this proposal was made at the Conservative party conference in 2007 – it is often dismissed as an old chestnut that pops up before every election.

Since the threshold was frozen at £325,000 for singles and £650,000 for couples back in April 2010, inheritance tax has tossed the issue of inflation aside and blanketed more estates in its net - “an offensive tax” according to Stephenson Harwood's Quarmby.

And it’s one the industry believes holds little hope of any such threshold thaw should the Tories find themselves locked in a coalition with Labour.

“Imagine if the politicians kept tax simple: we might see tax changes that would really change behaviours,” said the head of corporate tax at Crowe Clark Whitehill, Laurence Field.

He imagines a not-so-likely reduction in tax-free inheritance tax banding, accompanied by a reduction in the seven years it takes for a gift to drop out of inheritance tax – something that would encourage an earlier transfer of wealth between the generations and push younger people into the property market.

Meanwhile, the spectre of UK's divorce from the European Union creeps into a Conservative majority or rule. From a market perspective, whether or not it poses a real threat of a “Brexit”, a referendum will hang over investors' heads and cause an adverse reaction. It's something we just need to get out the way, says Quarmby.

“Investment decisions might be delayed pending clarity on the outcome. This in itself could cause the economy to slow since investment is such a volatile component of gross domestic product. The financial markets are likely to reflect this uncertainty via greater volatility and possibly higher discount rates / lower valuations,” says Allianz Global Investors' Tillett.

Bearing the Tory stamp, “Pension Freedom Day” has come and gone, granting pensioners more freedom to manage their retirement pots.

“The changes to pensions are perhaps the Tories major trump card which touches most of the electorate but the polls have not yet reflected this,” said Rowan Dartington Signature’s Guy Stephens.

“It therefore appears that regardless of whoever manages to form a Government, most likely in coalition, we will have another five years of limited progress, fudged proposals and compromise with only policies with the least resistance making it through.”

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Liberal Democrats

As is Labour, the Lib Dems are big on limiting pensions tax relief for higher earners. Their proposal is a single rate of tax relief on pensions set above the current basic rate of 20 per cent – something that favours lower versus higher earners, who would no longer get full relief.

“Since higher earners account for a disproportionate share of overall pension contributions, it seems likely that this sort of policy change may cause an overall reduction in pension contributions (which would be a marginal negative for wealth managers) and a higher overall government tax take,” said Allianz Global Investors' Tillett.

“This is a silly proposal which will devastate the pension market for high earners. I would not put any money in my pension if, in effect, I am being taxed on the contribution and I suspect I will not be alone in that sentiment. My prediction is that the effect of this proposal is that no one who is a higher or additional rate taxpayer will make pension contributions anymore,” said Stephenson Harwood's Quarmby.

Like Labour, this party has been slammed as “anti-business” with its plans to sweat more revenue from capital gains tax by pushing up the effective rate of the tax from 28 to 35 per cent for top rate taxpayers.

"This policy might be seeking to disincentivise the advantage of capital returns over income, but the net effect will likely discourage long-term investment," said Withers partner Sophie Dworetzsky.

"This is a shame and long-term investment and stability would be far better served by a return to a taper system or enhanced entrepreneurs' relief."

Scottish National Party

While the idea of SNP as a coalition government partner – most likely to Labour in the absence of an overall majority – reawakens the Scottish referendum beast, wealth professionals are somewhat reassured knowing that any transferral of fiscal powers to Scotland would take some time. The SNP's gain of parliamentary seats also makes the UK's affluent more susceptible to a reintroduction of the 50p rate on incomes over £150,000.

"The SNP will poll less than 10 per cent of the national vote, but is predicted to take anywhere between 30 and 56 seats north of the border, giving it disproportionate influence in Westminster with the power to be ‘kingmaker'," said Investec Wealth & Investment's Wyn-Evans.

UKIP

Of course's UKIP's plans to scrap inheritance tax altogether and cut the 45p top rate of income tax paid by those earning over £150,000 would, in theory, meet no opposition from the wealthy, but the affordability of these proposals is unclear.

"UKIP, while gaining some traction, will be unable to repeat their success in last May’s European Parliamentary elections. Constituency size bias and the lack of boundary reforms favour Labour, who would need to poll around 7 per cent less of the total vote than the Conservatives to attain the same amount of seats," said Wyn-Evans.

Between now and 7 May still presents ample opportunity in political time. We can expect more heated debates, louder whispers and bolder promises as parties try to wriggle past one another in the neck-and-neck race to the top. Increasingly, the notion that markets will react favourably to policies closer to the political centre ground is becoming an unsurprising one.