Savers have been urged to act as Labour could hike up taxes on savings in the Autumn Budget.
People have been urged to look at moving their saving into tax-free options, such as Premium Bonds and ISAs, before Chancellor Rachel Reeves unveils her fresh policies to boost Government revenues on October 30.
Tom Blake from Money Saving Guru, said now is the time to look at switching accounts. He said: “For those holding money in standard savings accounts, consider transferring funds into an ISA or Premium Bonds to shield yourself from potential tax implications, particularly if there are any reductions to the personal savings allowance.”
You can save up to £20,000 a year into ISAs tax-free while there is also no tax to pay on Premium Bonds prizes won in the monthly draw, which vary from £25 to £1million.
Mr Blake warned there could be changes to “annual allowances and even tax benefits” affecting savings, making it all the more important to consider where you can put your cash to avoid tax.
Mr Blake urged: “My advice would be to make the most of your current year’s allowance (£20,000 for 2024/25) as soon as possible, particularly for Stocks and Shares ISAs.
“The earlier you invest, the more time your money has to grow tax-free, and you’re locking in this year’s tax perks, regardless of future changes.”
He also encouraged people with cash ISAs to have a look around to see if they can get a better rate. He explained: “The interest rate landscape has shifted dramatically in recent months, and many providers have hiked their rates.
“Even a 0.5% increase can make a meaningful difference over time, so consider switching accounts if it seems fruitful to you.”
The savings expert also recommended to take full advantage of your other tax-free allowances, as these thresholds are “always under scrutiny” during the Budget.
Mr Blake said: “One strategy is to bring forward any planned capital gains, whether that’s selling investments or property, to take advantage of current thresholds before any potential cuts.
“Also, if you’re self-employed or a contractor, now is a good time to double-check your business expenses and deductions to ensure you’re operating as tax-efficiently as possible.”
Another tip for those who jointly hold assets with a spouse or civil partner is to look at redistributing the funds to get the most out of each person’s personal allowance and lower tax bands.
Mr Blake added: “Similarly, if you have children, think about opening a Junior ISA or even setting up a pension pot for them, as this could offer tax benefits both now and in the future.”
