Stay one step ahead of any wealth raids in the Budget

RACHEL Reeves will hold her next Budget on November 26, and although that feels some way off, there's no time to lose. The Chancellor seems likely to launch yet another tax raid, this time targeted more at individuals than businesses. The total haul could reach £25billion or more, with some suggesting it might match last year's £40billion.

- By Harvey Jones

Jon Hickman, tax partner at accountants BDO, said Reeves may struggle to balance the books by cutting spending alone. “Tax rises to fill an expected Budget shortfall look like a nailed-on certainty.”

The challenge is that we don’t yet know which taxes will rise. That makes planning tricky, but taking measured steps now could help minimise exposure.

Whatever you do, don’t panic — the run-up to every Budget sparks endless speculation, but most of the measures floated will never happen. A calmer approach, focused on using existing allowances, is usually best.

SHELTER

ISAs remain a valuable shelter. The annual £20,000 allowance lets savers shield money from income, dividend and capital gains tax for life.

Pensions minister Torsten Bell, who is masterminding the Budget for Reeves, has previously floated setting a lifetime £100,000 cap on total ISA savings, but this seems unlikely to happen in November.

The £20,000 allowance appears to be safe, but use all you can. Cash held outside an ISA is subject to income tax if the interest exceeds your personal savings allowance, while dividend tax kicks in after £500.

Capital gains tax (CGT) on non-ISA stocks is charged at a maximum 24%, and reports suggest Labour could hike this in line with income tax bands, which would lift the charge to 40% or 45%. Even if this doesn’t happen, the case for ISAs is solid.