Labour’s Tax Plans: 5 Ways to Protect Your Money Now

The Labour party’s reluctance to discuss tax hikes during the general election campaign has come to an end. With the autumn Budget approaching, it’s essential to take advantage of tax breaks that might soon be curtailed or closed altogether. In this article, we’ll explore five ways to protect your money from Labour’s tax plans.

1. Max Out Your Isa Allowance

Individual Savings Accounts (Isas) are a brilliant tax-efficient wrapper, allowing you to save up to £20,000 per year with all interest, dividends, and capital gains free of tax for life. With the current Isa allowance, you can accumulate a significant amount of wealth without worrying about tax implications. However, Labour might reduce the annual Isa allowance to £10,000 or even cap savings at £100,000. It’s crucial to make the most of the current allowance before any changes take effect.

Take advantage of the current Isa allowance before it’s too late.

2. Pay into Your Pension

Labour’s tax plans might also impact pensions, so it’s essential to contribute as much as possible to your pension pot. Pension contributions attract tax relief at 20, 40, or 45 percent, depending on your tax bracket. Additionally, you can withdraw 25 percent of your pot tax-free from age 55, with further withdrawals subject to income tax. However, Labour might slash the tax relief rate or axe the tax-free cash benefit altogether.

Contribute to your pension pot before Labour’s tax plans take effect.

3. Bank Any Capital Gains

If you have assets subject to capital gains tax (CGT), such as a second home, antiques, or shares, it’s essential to act quickly. Labour might bring CGT rates into line with income tax bands, increasing the tax burden on your assets. Consider selling your assets or business before the next Budget to avoid higher CGT rates.

Sell your assets or business before Labour’s tax plans take effect.

4. Escape Inheritance Tax Raid

Inheritance tax (IHT) bills are already at an all-time high, and Labour’s tax plans might make things worse. The basic £325,000 nil-rate band has been frozen since 2009, catching more families in the IHT net. Labour might scrap the £175,000 main residence allowance or gifting allowances, making it more challenging to pass on wealth to your loved ones.

Make the most of current IHT allowances before Labour’s tax plans take effect.

5. Consider a Company Structure

If you’re an investor or business owner, Labour’s tax plans might make it more beneficial to set up a company structure. This could help you avoid higher CGT rates and take advantage of corporation tax rates, which are currently 25 percent. However, this option requires careful planning and professional advice.

Consider setting up a company structure to minimize tax liabilities.

In conclusion, Labour’s tax plans pose a significant threat to your wealth. By taking advantage of the current tax breaks and planning ahead, you can protect your money and secure your financial future.