Chancellor Rachel Reeves plans tax hikes for wealthier citizens

Chancellor Rachel Reeves is expected to implement tax increases targeting wealthier individuals, following the guidance of Sir Keir Starmer. This move aligns with the ongoing discussions about the potential impact on Individual Savings Accounts (Isas), which are accessible to all income levels. Experts from the Resolution Foundation have suggested a cap of £100,000 on Isas or a reduction of the current £20,000 annual limit, arguing that the existing limit is disproportionately high compared to median savings. The Resolution Foundation highlights that the £20,000 limit has remained unchanged since 2017 and is over four times the median savings per adult. Changes to Isas could lead to increased importance for individuals to maximize their allowances, as the government may argue that only the wealthiest savers would be affected by any adjustments. Financial experts emphasize that contributions to Isas are not subject to retrospective taxation, allowing savers to benefit from tax-free interest and capital gains. The recent changes to Isa rules, effective from April 6, 2024, allow individuals to split their allowance across multiple accounts, although consolidating investments may be more manageable. Additionally, there are concerns regarding potential inheritance tax reforms, particularly affecting pension savings. As the government prepares for these changes, individuals are encouraged to consider their investment strategies, especially in light of possible capital gains tax hikes.