UK households are being warned to “transfer their money to a partner” before a potential Labour Government tax raid.
It is feared that Rachel Reeves could target pensions in her forthcoming Autumn Statement and first fiscal Budget as Chancellor.
To prepare for this, Sarah Coles, head of personal finance at Hargreaves Lansdown, revealed six tax-saving moves you can make before the Autumn Budget.
She said: “We just need to be careful not to panic, smash the window, and damage ourselves and our finances clambering through it.
“The key is to identify those that work for your overall finances, which you’ll be grateful for even if you don’t get the changes you were expecting.”
She explained how important it is to pay into a pension, adding: “We’ve seen a surge in people maxing out their SIPPs so far this year in response to rumours that the Chancellor might have the annual allowance or tax relief in her sights.
“As a higher or additional rate taxpayer, you’re benefiting enormously from tax relief that would see a £60,000 contribution cost just £36,000 for a higher rate taxpayer and £33,000 for someone paying additional rate tax.”
Ms Morrisey added: “This has the potential to turbocharge your contribution up to a maximum of £200,000 this tax year (provided you earn at least that much per year). Don’t worry if you don’t have enormous sums to put away though, as even more modest sums will still benefit from tax relief, and time in the market will see it grow and build your retirement resilience.
“If you’ve got a bit of extra money to invest now that the children have left home or that the mortgage is paid off, a contribution to your SIPP can be a great idea. It’s also worth saying that pensions are not liable to capital gains or dividend tax either, so they remain a hugely tax efficient way to save.”
She also encouraged ISA take-up and capital gains tax (CGT) and has urged people to transfer assets to a spouse.
Sarah explained: “This doesn’t reset the tax to zero. However, they have their own allowances to take advantage of, so they can use their annual CGT allowance to cut the tax bill. If they pay a lower rate of income tax, they’ll also pay at least some of the CGT at a lower rate.
“They can also wrap investments in their annual ISA and pension allowances, to ensure as much of your collective wealth is invested as tax efficiently as possible.”
