A tax expert is urging Brits to carry out a simple task ahead of the Autumn Budget on October 28. Chancellor John Healey is expected to target wealth, property, and capital gains measures in order to reduce fiscal pressures faced by the Labour Government. People across the UK are advised to be prepared for potential changes to their finances.
Only half of adults aware of budget
A recent report by Taxd, a UK-based digital tax filing and accounting platform, revealed that only half of British adults know about the upcoming budget. Meanwhile, more than four in ten have already had an overpayment, underpayment, missed relief or mistake on their tax.
Arjun Kumar, former PwC Tax Manager and co-founder of Taxd, told the Daily Express: "We asked the country what it would do if it were in charge of tax. What came back was real frustration with a system that keeps moving the goalposts. You can't control what the Chancellor announces. You can control whether you're making the most of what you already have."
Review your tax position
The expert advises people to take stock of their tax position ahead of any possible announcements. While most people focus on what could happen, he recommends "looking at what you already know," including adding up your income to work out which thresholds you're getting close to.
Mr Kumar explained how dividend tax rates rose in April while tax rates on savings and rental income will go up by two percentage points from next April. Meanwhile, Income Tax thresholds remain frozen until 2031.
He continued: "Only 38% of people say they know a lot about Income Tax, so it's no surprise the budget feels like something that just happens to them. But some of the changes hitting people's finances next year are already known. Start with your own numbers: what you earn, where that income comes from and which thresholds you're close to."
Check allowances and consider a Bed and ISA
The tax expert also recommends checking the allowances you already have before reacting to any speculation. The annual ISA allowance is £20,000 but, from April 2027, savers under 65 will only be able to put £12,000 of that into a cash ISA.
Mr Kumar advises people to consider a 'Bed and ISA', where you sell the shares and buy them back inside your ISA. He explained how that can use some or all of your £3,000 Capital Gains Tax annual exempt amount.
He said: "Don't make a financial decision just to beat a tax change that hasn't happened. Look at the allowances you have now and whether you're using them well."
Potential changes under consideration
Although changes are yet to be confirmed, Capital Gains Tax (CGT) is considered the primary target for a tax raise. Speculation suggests rates could be increased or aligned with income tax bands up to 45%.
Meanwhile, a personal allowance increase from £12,570 to £15,570 is also reportedly under consideration. There is also speculation about a potential reduction or capping of the 25% tax-free pension lump sum.
Mr Kumar said: "Two thirds of over-65s (67%) told us it's unfair to tax money that's already been taxed. Whatever you think of the principle, the rules are the rules. If you're earning more interest, check whether you've crossed your allowance. People who have never paid tax on their savings can suddenly find they owe it."
