If you're looking to beat the budget and make the most of your hard-earned cash, here's a five-point plan to help you manage your finances.
Firstly, consider using your ISA allowance. With the £20,000 annual limit on payments into tax-efficient accounts remaining in place until 6 April 2027, you can still take advantage of strong interest rates available in easy-access cash ISAs. However, from next year onwards, the rules will change for those under 65, and the amount that can be put into a cash ISA will be capped at £12,000. Any excess funds will have to be transferred to a stocks and shares ISA.
Another key strategy is to switch shares to an ISA. With income tax on dividends set to rise from 8.75% to 10.75%, it's essential to avoid this tax if possible. By switching investments into an ISA, you can take advantage of the current rules before they change. This process, known as "Bed & Isa," involves selling off existing investments and then repurchasing them within an ISA wrapper.
Reviewing your salary sacrifice scheme is also crucial. The government has weakened benefits for employees who pay part of their income into a pension via salary sacrifice, but there's still time to make changes. You can increase your contributions now to exploit the current savings before the rules change in 2029. Don't panic if you're not sure what to do – just speak with your employer and explore other options.
Making financial gifts while you're still alive is another way to reduce your estate's value and minimize inheritance tax (IHT). There are various allowances you can use, including a £3,000 gift allowance per year without adding to the value of your estate. You can also give gifts of up to £250 per person each tax year or use the "potentially exempt transfer" rules to pass on money to loved ones.
Lastly, weigh up the new high-value council tax surcharge, known as the "mansion tax." This tax will hit owners of properties in England worth more than £2 million, with charges starting at £2,500 a year and rising to £7,500 for homes worth over £5 million. While this may seem like a significant change, many analysts predict that fewer than 1% of properties in England will be affected, giving owners a two-and-a-half-year window to consider their options.
Firstly, consider using your ISA allowance. With the £20,000 annual limit on payments into tax-efficient accounts remaining in place until 6 April 2027, you can still take advantage of strong interest rates available in easy-access cash ISAs. However, from next year onwards, the rules will change for those under 65, and the amount that can be put into a cash ISA will be capped at £12,000. Any excess funds will have to be transferred to a stocks and shares ISA.
Another key strategy is to switch shares to an ISA. With income tax on dividends set to rise from 8.75% to 10.75%, it's essential to avoid this tax if possible. By switching investments into an ISA, you can take advantage of the current rules before they change. This process, known as "Bed & Isa," involves selling off existing investments and then repurchasing them within an ISA wrapper.
Reviewing your salary sacrifice scheme is also crucial. The government has weakened benefits for employees who pay part of their income into a pension via salary sacrifice, but there's still time to make changes. You can increase your contributions now to exploit the current savings before the rules change in 2029. Don't panic if you're not sure what to do – just speak with your employer and explore other options.
Making financial gifts while you're still alive is another way to reduce your estate's value and minimize inheritance tax (IHT). There are various allowances you can use, including a £3,000 gift allowance per year without adding to the value of your estate. You can also give gifts of up to £250 per person each tax year or use the "potentially exempt transfer" rules to pass on money to loved ones.
Lastly, weigh up the new high-value council tax surcharge, known as the "mansion tax." This tax will hit owners of properties in England worth more than £2 million, with charges starting at £2,500 a year and rising to £7,500 for homes worth over £5 million. While this may seem like a significant change, many analysts predict that fewer than 1% of properties in England will be affected, giving owners a two-and-a-half-year window to consider their options.
I'm not sure about these new financial strategies... I mean, they sound good on paper but what's the catch? 
The ISA thing just means more work for me, switching shares and wrapping them up in a different account. And don't even get me started on the salary sacrifice scheme - it sounds like the government is just shifting the burden to the employee 
. And high-value council tax surcharge? That's just going to put more pressure on people who are already struggling 
. but what about those of us who don't wanna bother with all that? just use the £3k gift allowance per year and be done with it, innit? 
plus, if u're worried about IHT, just give some gifts to your loved ones and be good, right? 
council tax surcharge tho... sounds dodgy. 1% of properties in england will be affected but still, £7k a year is a pretty penny... think we should be saying no to this "mansion tax" 
if only a tiny percent of homes are going to be hit 
and let's be real, £7,500 isn't the end of the world 
. It's like, you're just getting started with saving and then BAM! the rules change. At least there's still time to switch over to a stocks and shares ISA or make some other smart moves. And yeah, the mansion tax might be a pain for those who own multi-million pound homes, but I guess it's kinda fair since they're lucky enough to have that kind of wealth 
. But what about all the other stuff people can do to save and invest? 
but seriously, all these financial tips are so basic, can't we just have a universal basic income already