Finance giants have seen a rush of people pouring cash into Individual Savings Accounts, which offer protection against paying tax, ahead of the October Budget.
The number of people using the full £20,000 annual tax-free ISA allowance to either save cash or buy stocks and shares has tripled, according to wealth advice and investment firms.
Speculation about just what will be included in the Budget has seen many thousands of people looking for ways to protect their wealth against any increase in taxes, such as Capital Gains Tax.
Investment platform, Bestinvest, said the number of customers maxing out their yearly allowance more than tripled in the first two weeks of October compared to the two-year average for 2022 and 2023.
The firm noted a 344 percent increase in numbers of people choosing to invest their full Isa allowance this month.
In September, increases for contributions of more than £15,000, £10,000 and £5,000 were 208 percent, 213 percent and 188 percent respectively when compared with the years prior.
Alice Haine, of Bestinvest, said: “Fears that the Chancellor is planning to hike capital gains tax rates on the sale of shares has fuelled investor appetite for stocks and shares ISAs, the tax-free savings account that allows adult investors to shelter up to £20,000 this financial year.
“We have seen a surge in the number of clients making sizeable contributions into their ISAs, including a dramatic increase in the number of people maxing out their allowance in full by adding £20,000.”
Interactive Investor, another online investment site, said the number of their clients maxing out the annual allowance rose 65 percent between July and September compared to the same period last year.
The firm also noted a 44 percent rise in that period in transactions for an Isa product that allows savers to shelter assets within tax efficient savings accounts by taking advantage of any unused Isa allowance.
Myron Jobson, of Interactive Investor, told the Telegraph: “Fears of a less generous investment taxation regime have provided extra impetus for investors to do what they should already be doing – making the most of the tax-efficient ISA wrapper, which shields gains and income generated from investments from tax.”
Fund group, Vanguard Europe, said it has seen 43 percent more clients maximise their annual tax-free Isa allowance as of the end of September compared with the same period last year, with another 43 percent also cramming the full £60,000 tax-exempt allowance into their self-invested pensions.
James Norton, of Vanguard Europe, said: “There is a high degree of uncertainty about tax changes ahead of the autumn Budget and we’ve been warned of some potentially painful outcomes for individuals.
“While this can feel daunting, savers and investors should not let speculation cloud their judgement – maintaining clear goals and a long-term investment perspective will continue to be crucial in setting you up for future success.”
It comes after it was revealed Ms Reeves said the tax-free Isa regime needed “overhauling” in an unearthed 2016 newspaper column. Writing in The Independent, she called for the introduction of a £500,000 lifetime allowance.
The revelation has sparked fears she may target Isas in her October 30 Budget.
A government spokesman said: “We do not comment on speculation around tax changes outside of fiscal events.”
