Six money checks to make before Rachel Reeves’ Budget on Wednesday | Personal Finance | Finance
As Britons brace for an Autumn Budget of tax rises and spending cuts this week, experts have shared some vital financial checks to make now that can “really pay off”.
Prime Minister Sir Keir Starmer has prepared UK households for potential tax increases of up to £35billion in Wednesday’s Budget, cautioning in a speech today that the country must confront fiscal realities.
He said “better days are ahead” and that “tax rises will prevent austerity and rebuild public services”. Most of these tax hikes are anticipated to impact businesses and business owners, though workers, savers, and investors are also likely to feel the effects.
Lexi Burgess, a personal finance expert from the free credit-score app, CredAbility, said: “This Autumn Budget is a key opportunity for the Government to tackle some important issues that affect our everyday lives.”
However, she noted: “Taking time now to check your finances can really pay off. It helps you feel more in control and ready for whatever changes come your way. By staying on top of your credit, debts, and goals, you’re setting yourself up for success”.
Review credit scores
Before the Budget announcements, Ms Burgess said: “Take the time to check your credit score.
“A good credit score can open doors to better mortgage rates and lower loan costs. Many free services offer a comprehensive overview of your credit status, allowing you to identify any issues that could impact your financial options.”
Assess debts
Take a close look at current debts and repayment plans. Ms Burgess said: “Knowing exactly how much you owe and the interest rates on each debt can help you prioritise repayments and avoid unnecessary stress.
“If the budget introduces changes to interest rates or borrowing policies, being informed about your debts can help you navigate those changes.”
Update financial goals
Revisit financial goals in light of potential Budget changes. Ms Burgess suggested: “Consider both short-term objectives, like saving for a holiday, and long-term ones, such as retirement. Adjusting these goals will help you stay on track, no matter what fiscal policies come into play.”
Stephen Kenny, head of private clients at audit and accountancy firm PKF Littlejohn suggested a few more “easy wins” in line with predicted policy changes.
Mr Kenny said: “With two days to go, readers will be limited in terms of what they can do to prepare for the Budget if they haven’t done so already. However, a few easy wins are still possible.”
Selling assets
Mr Kenny said: “If you are thinking about selling an asset or giving away, pre-budget may be the right time to do this. This would lock in the current rate of capital gains tax at 20%, which is widely expected to increase.”
Maximise pension contributions
If in a position to do so, Mr Kenny suggested maximising pension contributions. He explained: “At the moment, pension contributions qualify for full tax relief. However, Labour could change this and introduce a flat rate of relief.”
For the 2024/25 tax year, the standard annual allowance to contribute to a pension is £60,000 or 100% of annual salaries, whichever is lower.
For individuals earning over £260,000, the annual allowance decreases by £1 for every additional £2 earned above this threshold, until it reaches a minimum of £10,000.
Maximise ISA contributions
Finally, Mr Kenny suggested considering transferring existing assets into an ISA wrapper. He explained that would ensure that future capital growth and income are “outside of the reach of HMRC”.
The maximum amount of tax-free cash people can save in an Individual Savings Account (ISA) in the 2024/25 tax year is £20,000.
In terms of anything more significant – for example, the disposal of a business, property or a significant quantity of shares, Mr Kenny said: “It is now too late to drive through before Budget day. Transactions rushed through ahead of October 30 are more likely to be on HMRC’s radar and subject to additional scrutiny.”
Additional, he warned: “Consider how you would feel if the changes to rates don’t come into force until April 2025 (or later), rather than on Budget day itself.
“This is particularly pertinent for complex or large changes to items such as Inheritance Tax. A period of grace could provide a meaningful opportunity to assess the impact of the changes and how they’ll apply to your situation so that you then have the opportunity to plan effectively for the change.
“Rather than rushing through transactions that might be the source of regret, I’d recommend a careful review of the current situation so that you are in a strong position to react promptly to any changes announced next week.”
