Speculation is rife about how Chancellor John Healey will attempt to balance the books in his first Autumn Budget.
Healey will deliver the Budget on 28 October and with Labour pledging not to raise income tax, VAT or national insurance and to keep the triple lock until April 2030, “targeted measures” on wealth, investments, pensions and property are “the most likely revenue-raising options”, said Rathbones.
The Treasury is facing pressures of “rocketing government borrowing”, said The Sun, driving fears of “painful tax hikes”.
1. Don’t act too early
Nothing has been confirmed, but there are rumours of changes to capital gains tax rates and pensions tax.
The “general consensus”, said Saga, is that it is unwise to make decisions based on “Budget rumour and speculation”.
It is worth reviewing transactions that are “already in the pipeline” and reassessing your tax position “if changes are ultimately announced in the Budget”.
There is an “annual rumour”, said Trustnet, that the amount that can be taken tax-free from a pension at retirement will be cut. But “acting early has risks” as reinvesting a withdrawn lump sum can breach HMRC’s recycling rules and lead to penalties.
2. Make use of existing tax allowances
We already know that the cash ISA allowance is being reduced to £12,000 for under-65s from April 2027.
ISAs remain one of the “most valuable tax shelters”, said Hargreaves Lansdown, so it is worth making use of the current full £20,000 allowance.
Married couples and civil partners have “additional flexibility” as they can move assets to each other without any tax liability and can “maximise two sets of tax-free allowances” including on capital gains tax exemptions.
3. Boost your pension contributions
A “limited number of taxes” could rise in the Budget, said The i Paper, due to manifesto pledges on income tax, VAT and national insurance, plus Prime Minister Andy Burnham has “ruled out” changes to stamp duty and council tax.
But income tax thresholds remain frozen and the chancellor could even reduce these for additional rate taxpayers. The impact of frozen thresholds could “continue to hit hard”, said FT Adviser.
It is therefore “worth seeing” if higher earners can increase their pension contributions to help “cut their income tax bill”.
4. Focus on what you can control
There is plenty of speculation about what will be announced in the Budget, said Coutts, but while “headlines come and go, your financial goals are likely to be longer term”.
Focusing on objectives is important, and it is also worth reviewing finances to “highlight opportunities that already exist, rather than speculating on changes that may never happen”.
5. Plan for what you know
There are changes announced in the previous Budget that you can prepare for such as the reduced cash ISA allowance from April 2027 and the inclusion of pensions for inheritance tax calculations.
These are changes “we already know about”, said The i Paper, so it is something “that people can plan for”.