With the Autumn Budget coming on November 26, millions of Brits have been left worried about their finances. Many are speculating that the Cash ISA limit will be halved. Now Laura Purkess, personal finance expert at Investing Traders, has urged Brits to act now ahead of the possible changes to tax rules.
She said: “The Chancellor is reportedly considering cutting the cash ISA allowance, which is the amount you can save into a cash ISA each year, down from £20,000 to £12,000 or even £10,000.
“If you had £20k to invest for the next few years and the Cash ISA allowance was cut to £10,000, you could pay hundreds or even thousands of pounds in tax by putting the remainder into a taxable savings account.”
Laura advised it’s better to put your cash into an ISA over a taxable savings account, as the savings will grow over time and you don’t want to pay more tax than you need to.
“If you have longer-term savings goals and a comfortable savings buffer, it could be worth considering putting some into a stocks and shares ISA instead. The stock market has historically outperformed money held in cash over the longer term, so you could be better off,” she added.
Laura also encouraged bankers to make sure they’re getting the best savings rate.
She said: “Bagging the best rate now will make your money work harder and boost your savings, which could put you in better stead if any taxes are raised down the line.
“Just a few percentage points can make a big difference to the returns on your savings long-term, so don’t give in to inertia and accept a lower rate than you could get.”
However, she warned it’s best not to make any major financial decisions based on speculation.
Reflecting on last year’s budget, Laura said: “Thousands of people reacted to speculated changes to pension tax-free lump sums ahead of last year’s Budget, and then nothing happened, leaving them needlessly worse off. »
