Four steps to consider to beat Rachel Reeves' Budget tax raid as Labour promises 'painful' decisions

It’s not known what will be announced, and financial experts have cautioned against making major financial decisions based on Budget speculation.

Rachael Griffin, tax and financial planning expert at Quilter, emphasised the importance of this amid concerns capital gains tax rates could be hiked.

“At this stage, nothing has been confirmed so unless realising gains from investments or selling a second home or business had already been in your plans, making decisions based on what might happen is not sensible,” she said.

“Nonetheless, given the already tight squeeze on the various tax allowances and thresholds, as well as the rumours which are rapidly building ahead of the budget, it would be wise to ensure you seek professional financial advice where possible to help you make the most tax efficient decisions for your circumstances.”

GB News asked Mark Levitt, partner at tax, accounting and business advisory firm Blick Rothenberg, whether there were any financial steps which could be good to consider ahead of the Budget.

1. ISAs

“You should fund your Isa before Tuesday 29th in case a monetary limit is introduced,” Levitt said.

It follows reports that a lifetime cap could be introduced on ISAs. There’s also reports of Reeves hiking the capital gains tax rate and extending the freeze on tax allowances.

The current freeze, introduced by Rishi Sunak and extended by Jeremy Hunt, has already meant Britons are being dragged into higher income tax brackets, while some savers have faced being taxed on their savings interest.

Levitt added: “Currently £20,000 can be put into an adult ISA each year; the income and gains are tax-free.

“With the intended rise in CGT on shares this will be become valuable.”

2. Capital gains tax

Addressing potential capital gains tax changes, Levitt said: “Lock into capital gains on shares before 29th, although any change in CGT may be deferred until April 6, 2025; this will encourage sellers to crystallise gains before April 5, 2025."

3. Inheritance tax

Last week, it was reported Reeves was looking at sweeping changes to UK inheritance tax rules - including extending the "seven-year rule" to 10 years.

If it were to be implemented, it would mean IHT could be charged at a taper rate on gifts which are not within the inheritance tax allowances, if the benefactor dies within 10 years of giving the gift.

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“Consider making gifts before the Budget as the seven-year rule could be extended,” Levitt said.

“If you gift assets, you cannot continue to enjoy the benefit. Make sure you leave enough for your old age.”

4. Fuel

On potential fuel duty increases, the suggestion from Levitt was simple: “Fill up the non-electric cars over the weekend!”