By using this site, you agree to the Privacy Policy and Terms of Use.
Accept

News Junction

Notification Show More
Font ResizerAa
  • Home
  • World News
    World NewsShow More
    Ousted Bangladesh PM Hasina’s party barred from election as party registration suspended
    Ousted Bangladesh PM Hasina’s party barred from election as party registration suspended
    May 14, 2025
    Cassandra Ventura testifies, tells jury freak offs became a job
    Cassandra Ventura testifies, tells jury freak offs became a job
    May 13, 2025
    White South Africans arrive in US after Trump administration granted them refugee status | World News
    White South Africans arrive in US after Trump administration granted them refugee status | World News
    May 13, 2025
    Trump’s Mideast Wish List: + Trillion in Investments – and Some Diplomacy Too
    Trump’s Mideast Wish List: $1+ Trillion in Investments – and Some Diplomacy Too
    May 13, 2025
    Djokovic-Murray coaching partnership ends before French Open | Tennis News
    Djokovic-Murray coaching partnership ends before French Open | Tennis News
    May 13, 2025
  • Business
    BusinessShow More
    Ukraine blows up bridges to consolidate its positions in Russia
    Ukraine blows up bridges to consolidate its positions in Russia
    August 18, 2024
    Commentary: AI phones from Google and Apple will erode trust in everything
    Commentary: AI phones from Google and Apple will erode trust in everything
    August 18, 2024
    The most famous Indian Dishes – Insights Success
    The most famous Indian Dishes – Insights Success
    August 18, 2024
    Life on the road as a female long rides cyclist
    Life on the road as a female long rides cyclist
    August 18, 2024
    UK inflation rises to 2.2%
    UK inflation rises to 2.2%
    August 18, 2024
  • Cryptocurrency
    CryptocurrencyShow More
    BTC, ETH, XRP, BNB, SOL, ADA, DOGE, PI, LEO, HBAR
    BTC, ETH, XRP, BNB, SOL, ADA, DOGE, PI, LEO, HBAR
    May 14, 2025
    Altcoins’ roaring returns and falling USDT stablecoin dominance suggest ‘altseason’ is here
    Altcoins’ roaring returns and falling USDT stablecoin dominance suggest ‘altseason’ is here
    May 14, 2025
    How to Use tsUSDe on TON for Passive Dollar Yield in 2025
    How to Use tsUSDe on TON for Passive Dollar Yield in 2025
    May 13, 2025
    South Korea’s Democratic Party sets up ‘Digital Asset Committee’
    South Korea’s Democratic Party sets up ‘Digital Asset Committee’
    May 13, 2025
    Curve DAO (CRV) price drops as Curve Finance battles DNS attack
    Curve DAO (CRV) price drops as Curve Finance battles DNS attack
    May 13, 2025
  • Technology
    TechnologyShow More
    How to Improve Your Spotify Recommendations
    How to Improve Your Spotify Recommendations
    August 18, 2024
    X says it’s closing operations in Brazil
    X says it’s closing operations in Brazil
    August 18, 2024
    Supermoon set to rise: Top tips for amateur photographers | Science & Tech News
    Supermoon set to rise: Top tips for amateur photographers | Science & Tech News
    August 18, 2024
    Scientists Want to See Videos of Your Cat for a New Study
    Scientists Want to See Videos of Your Cat for a New Study
    August 18, 2024
    OpenAI’s new voice mode let me talk with my phone, not to it
    OpenAI’s new voice mode let me talk with my phone, not to it
    August 18, 2024
  • Entertainment
  • Sports News
  • People
  • Trend
Reading: How to shield your savings from a Labour tax raid
Share
Font ResizerAa

News Junction

  • World News
  • Business
  • Technology
  • Cryptocurrency
  • Trend
  • Entertainment
Search
  • Recent Headlines in Entertainment, World News, and Cryptocurrency – NewsJunction
  • World News
  • Business
  • Cryptocurrency
  • Technology
  • Entertainment
  • Sports News
  • People
  • Trend
Have an existing account? Sign In
Follow US
News Junction > Blog > World News > How to shield your savings from a Labour tax raid
How to shield your savings from a Labour tax raid
World News

How to shield your savings from a Labour tax raid

Published July 7, 2024
Share
10 Min Read
SHARE

Protecting your money has already become more difficult, but further changes are in store under Keir Starmer’s government – Kin Cheung/AP

With Keir Starmer in power, savers must act now to protect their wealth from the new Labour government.

Protecting your money had already become more difficult following the Conservatives slashing tax allowances in April, but further changes could follow soon.

Higher-rate, 40pc, taxpayers are already finding themselves £335 worse off as a result of the tax squeeze on savings and investments, according to estimates by wealth manager Quilter.

Investors could face an even bigger hit if Labour subsequently increases taxes.

The capital gains tax allowance has been brutally halved from £6,000 to £3,000 for this tax year, while the dividend tax allowance dropped from £1,000 to just £500. As a result of the cut, an extra 1.1 million people will have to pay dividend tax as of April 2024, according to figures from HMRC obtained in a Freedom of Information request by stockbroker AJ Bell.

In addition to a tax raid on investment returns, the freeze to the personal savings allowance – the limit to how much savers can earn in interest before having to pay tax – means savers are keeping less of the income they generate from cash.

The personal savings allowance has been frozen at £1,000 for basic-rate taxpayers and £500 for higher-rate taxpayers since 2015. The hundreds of thousands of additional rate taxpayers who entered the 45pc bracket in 2023-24 get no savings allowance.

As savings rates have soared as high as 5pc, a higher-rate taxpayer now needs just £10,000 in savings to exceed their personal savings allowance.

As a result an estimated 2.75 million people paid tax on their cash savings interest in the 2023-24 tax year, according to AJ Bell. This includes around one in 20 basic-rate payers, rising to one in six higher-rate payers and around half of top-rate payers.

The tax raid could be about to get even worse now Labour is in power. The party has been determined to present itself as a tax-cutting party, and repeatedly highlighted former chancellor Jeremy Hunt’s use of “fiscal drag” to raise the tax burden.

The party has ruled out increasing income tax or National Insurance if it wins the next election.

But some believe Chancellor Rachel Reeves will have to raise taxes if the party is to fund its spending pledges – and if that is the case then taxes on “unearned income” from property or share portfolios are an obvious target.

The party has appeared split over capital gains tax – with Angela Rayner, now deputy prime minister and Secretary of State for Levelling Up, Housing and Communities, last year refusing to rule out an increase in the rate during an interview with BBC Radio 4 despite Ms Reeves saying she had “no plans” to do so.

According to analysis by Quilter, an increase to capital gains tax rates under Labour could cost higher taxpayers an extra £900 in tax. This assumes a £250,000 capital gain from a property sale and that capital gains tax rates are aligned with income tax rates, as some have called for.

Selling a second home incurs capital gains tax at 24pc (down slightly from 28pc in 2023-24) if you are a higher-rate taxpayer and 18pc if you pay the basic-rate of income tax. The rate is 20pc and 10pc for other assets such as shares.

The suggestion to align income and capital gains rates was first made by the Office for Tax Simplification, a now-disbanded government agency. If this happened, the capital gains tax rates would be 20pc, 40pc and 45pc depending on the seller’s income tax bracket.

Isas remain the most effective way to shield your savings and investments from any tax changes.

A family of four could stash as much as £116,000 in Isas between now and April 7 2025 using the full allowances available for the 2024-25 and 2025-26 tax years.

Pensions also allow gains to build up free of tax. A family of four, where both parents earn £60,000 each, could add £255,000 over both tax years. Though of course pensions are not accessible until at least the age of 55 and withdrawals are subject to income tax (beyond the 25pc tax-free allowance).

It takes minutes to set up an Isa or self-invested personal pension (Sipp) as long as you have personal and bank account details and National Insurance numbers.

Quilter has estimated that individuals with £20,000 outside of an Isa will lose £135 or £335 this year, depending on their income tax bracket, due to the capital growth being lost to capital gains tax and dividend tax.

Shaun Moore, of Quilter, said: “Lower allowances and higher interest rates mean you will likely find that your personal savings allowance, CGT annual exempt amount and dividend allowance will be decimated very quickly. Even only relatively small gains can waste huge amounts of your allowances next tax year and therefore the sooner assets can be in a tax-sheltered environment like an Isa the better.”

If you currently have investments outside of a tax-free wrapper, you can sell these and move the proceeds into an Isa in a process called “Bed and Isa”.

Over time, the capital gains tax savings can be huge. Assuming a £20,000 investment grows at 7pc a year – with income reinvested – then in ten years’ time you would have a gain worth £19,343, according to Bestinvest. If held in an Isa then all of this would be tax-free – if it is kept outside, then a higher-rate taxpayer would pay £3,269 in tax, assuming the allowance remained at £3,000.

Inheritance tax could be another issue. A leaked recording of a shadow frontbencher has raised fears that the party could be planning a raid on family wealth after death. Darren Jones told a public meeting in March that inheritance tax could be used to “redistribute wealth” and address “intergenerational inequality”. IHT receipts are already at a record high, thanks to frozen tax-free thresholds.

Labour could choose to cut or lower the £325,000 tax-free exemption, widening the scope of inheritance tax, or attack various reliefs that allow people to give away their wealth earlier, without paying death duties. Either move could put your savings at risk, as they’ll form part of your estate when you die.

It may therefore make sense to move money out of your estate. You could do this by making gifts, and using your family’s allowances – this can be helpful for IHT and other taxes, too.

Laura Suter, of AJ Bell, said: “If one half of the couple is a lower earner, or non-earner, there are tax advantages to moving certain investments or savings into their name, to make use of their lower tax rate. At the same time, if one half of the couple hasn’t used up their tax-free allowances in a year and the other has, it might be worth shifting assets to benefit from their personal savings allowance, capital gains tax allowance or dividend tax-free sum.

“Equally if you’ve maxed out your Isa or pension allowances and your spouse hasn’t, you should consider whether you want to move money into their name to use those allowances.”

In addition, you can make use of your children’s allowances. You can invest up to £9,000 into a Junior Isa for your child every year until they turn 18.

As of April 2024 savers can open as many Isas as they want, where previously they could only open one of each type. This will allow savers to more easily take advantage of the top savings rates in the cash Isa market.

#shield #savings #Labour #tax #raid

TAGGED:Capital gains taxdividend taxIncome TaxInheritance taxKeir StarmerLabournew Labourpersonal savings allowanceraidSavingssavings allowancesavings and investmentsShieldtaxtax allowances
Share This Article
Facebook Twitter Pinterest Whatsapp Whatsapp LinkedIn Email Copy Link Print
Share
What do you think?
Love0
Sad0
Happy0
Sleepy0
Angry0
Dead0
Wink0
Previous Article Michael Jackson’s Neverland estate is in danger of destruction due to a fast-moving Southern California wildfire Michael Jackson’s Neverland estate is in danger of destruction due to a fast-moving Southern California wildfire
Next Article James Corden DELAYS his latest West End performance in The Constituent…  so he can watch the England match on his iPad from the stage! James Corden DELAYS his latest West End performance in The Constituent…  so he can watch the England match on his iPad from the stage!
- Advertisement -

Latest Post

BTC, ETH, XRP, BNB, SOL, ADA, DOGE, PI, LEO, HBAR
BTC, ETH, XRP, BNB, SOL, ADA, DOGE, PI, LEO, HBAR
Cryptocurrency
Ousted Bangladesh PM Hasina’s party barred from election as party registration suspended
Ousted Bangladesh PM Hasina’s party barred from election as party registration suspended
World News
Altcoins’ roaring returns and falling USDT stablecoin dominance suggest ‘altseason’ is here
Altcoins’ roaring returns and falling USDT stablecoin dominance suggest ‘altseason’ is here
Cryptocurrency
Cassandra Ventura testifies, tells jury freak offs became a job
Cassandra Ventura testifies, tells jury freak offs became a job
World News
How to Use tsUSDe on TON for Passive Dollar Yield in 2025
How to Use tsUSDe on TON for Passive Dollar Yield in 2025
Cryptocurrency
White South Africans arrive in US after Trump administration granted them refugee status | World News
White South Africans arrive in US after Trump administration granted them refugee status | World News
World News
- Advertisement -

You Might Also Like

South Carolina woman accused of killing newlywed is denied bond
World News

South Carolina woman accused of killing newlywed is denied bond

August 2, 2023
FedEx’s DRIVE initiative and expected cost savings key to FQ4 results (FDX)
Business

FedEx’s DRIVE initiative and expected cost savings key to FQ4 results (FDX)

June 24, 2024
Millie Bobby Brown fuels rumors of second wedding to Jake Bongiovi as she is pictured trying on a crystal-covered bridal gown in NYC
World News

Millie Bobby Brown fuels rumors of second wedding to Jake Bongiovi as she is pictured trying on a crystal-covered bridal gown in NYC

July 3, 2024
This Morning faces fresh blow as Dermot O’Leary follows in Alison Hammond footsteps and lands his own show on rival channel – after the pair missed out on ITV’s top job
World News

This Morning faces fresh blow as Dermot O’Leary follows in Alison Hammond footsteps and lands his own show on rival channel – after the pair missed out on ITV’s top job

July 4, 2024

About Us

NEWS JUNCTION (NewsJunction.xyz) Your trusted destination for global news. Stay informed with our timely and accurate reporting on diverse topics, including politics, technology, science, entertainment, sports, and more. Count on us for unbiased and reliable updates at your fingertips.

Quick Link

  • About
  • Disclaimer
  • Privacy Policy
  • Terms of Use
  • Contact

Top Categories

  • World News
  • Business
  • Technology
  • Entertainment
  • Cryptocurrency
  • Sports News
  • Trend
  • People

Subscribe

Subscribe to our newsletter to get our newest articles instantly!

    © 2023 News Junction.
    • Blog
    • Advertise
    • Contact
    Welcome Back!

    Sign in to your account

    Username or Email Address
    Password

    Lost your password?