In his first speech as prime minister, just two months ago, Andy Burnham said that it was time to make “the biggest changes in the last 40 years” and introduce “a new political model and a new economic model.”
So, we’re expecting a few surprises from the first Autumn Budget of his tenure, which will be announced by the new chancellor, John Healy, on 28 October.
It’s always difficult to forecast exactly what changes will be made to government spending and taxation, and we often see consumers and businesses postpone decisions until we have clarity.
If you’re unsure what you can and can’t do – or should and shouldn’t – regarding your personal finances, here are some things to consider.
Do review your current investments
If you know exactly where you stand financially, it will be much easier to see how any changes made on the day will affect you.
For example, there are reasons to believe that capital gains tax could increase, or the annual exempt amount could fall.
So, it would help to know the level of unrealised gains you currently have and any unreported losses you’ve made in the last four years. You’ll then be positioned to make quicker decisions if changes are announced.
Don’t sell assets based on predictions
While changes announced in the Budget can come into effect immediately, tax rates and thresholds usually remain the same until at least the end of the current tax year.
That gives you several months to consider action.
Predictions can be wrong, so it’s worth waiting until you have all the facts. Besides, there’s more to consider than just your tax position when you’re buying and selling investments.
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Do consider a Lifetime ISA
We already know that the Lifetime ISA scheme will be changing soon, as the government has confirmed plans to replace it with a different product targeting homebuyers. However, existing Lifetime ISA holders will continue to receive the 25 per cent bonus on contributions.
A Lifetime ISA can be a great complement to a pension for retirement planning, particularly for basic-rate taxpayers.
If you’re under 40, you might want to open one – you only need £1 – so you can at least retain all your options.
Don’t rush a property purchase
You’ll still be able to use your Lifetime ISA cash towards a property purchase even after the scheme changes.
Plus, the prime minister has confirmed that there will be no changes to stamp duty on homes this year.
So, there’s no reason to rush if you’re in the process of buying a home – and no need to delay until after the Budget announcement.
Do make a will and inheritance plan
Changes to inheritance tax are looking likely. This might not be an immediate concern for you, if you’re young and healthy or if your assets fall well within existing nil-rate bands.
Still, around half of UK adults don’t have a valid will, so if you’re among them, you should aim to do this sooner rather than later.
Without one, your assets may not be split as you’d like, particularly if you’re part of an unmarried couple.
Don’t make hasty pension decisions
Last year, we saw a huge increase in people withdrawing their tax-free lump sum from their pension in the run-up to the Budget announcement.
Some may have regretted this later, as the government made no changes to the tax-free cash policy at all – as noted earlier, predictions and rumours can get it very wrong in the end so don’t make financial moves based solely off these.
Pension decisions are often permanent and can have significant consequences, so take your time and seek advice if you need it.
Do top up your ISA
Another upcoming change we’re already aware of is to the ISA annual allowance. From 6 April 2027, your total ISA allowance will remain £20,000, but your cash allowance will fall to £12,000 if you’re under 65 – the remaining £8,000 must be invested.
You’ve got a while until then, but there’s no harm in topping up your ISA throughout the year, and regular saving might give you a better chance of using your full allowance before the deadline.
As with all our suggestions, the key is to act on the information available and not rush into changes.
Whatever the Budget brings, as long as you know your numbers, stay calm and take your time, you’ll be able to keep your financial plan on course.
When investing, your capital is at risk and you may get back less than invested. Past performance doesn’t guarantee future results.
