There are simple steps people can take now to protect their savings before the Budget (Image: Getty)
With the Autumn Budget looming on November 26, speculation is swirling about what Chancellor Rachel Reeves might announce. One rumour swirling is that there will be a significant cut to the cash ISA allowance, potentially slashing the current £20,000 annual limit to just £10,000–£12,000.
But financial experts say you don’t have to wait for the official announcement to get ahead – and there’s one simple action many can take right now to safeguard their savings. Laura Purkess, personal finance expert at Investing Insiders, explains that while it’s tempting to react to Budget speculation, caution is key.
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She said: “This Budget looks set to be a big one, with speculation rife about a number of significant changes to tax rules.
“While it is all speculation at this stage, rumours a few weeks out from Budgets tend to be grounded in some truth.
“That said, nothing good will come from making major financial decisions based on rumours.
“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.”
Still, there are proactive steps you can take that won’t backfire – and one stands out above the rest: maxing out your ISA allowance.
Chancellor Rachel Reeves will deliver her Budget on November 26 (Image: Getty)
Max out your ISA limit – or as much as you can
The Chancellor is reportedly considering cutting the cash ISA allowance in half.
Ms Purkess advised: “If you have the cash to save and haven’t used up your ISA limit for this tax year, it could be worth doing so.
“If you had £20,000 to invest over the next few years and the allowance drops to £10,000, the remainder would end up in a taxable savings account – potentially costing you hundreds or even thousands in tax.”
Even if you can only contribute a smaller amount, she adds, putting money into an ISA rather than a regular savings account means it can grow tax-free over time.
For longer-term savers, a stocks and shares ISA could be more beneficial. Historically, stock markets outperform cash over five years or more, potentially leaving savers better off.
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While it may not be as urgent as topping up your ISA, ensuring your money earns the best possible interest can also provide a buffer against looming tax hikes.
Ms Purkess explained: “Easy-access savings accounts are paying around 4.5% at the top end”, pointing to options like Sidekick’s Multi Shield account and Tesco Bank’s Internet Saver.
“Even a few percentage points difference can have a long-term impact on your returns.”
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Check your pension
Pensions are often in the firing line during Budgets, and this year may be no different. Rumours suggest salary sacrifice contributions could be capped at £2,000 annually.
Ms Purkess warned against snap decisions, explaining: “Taking tax-free cash from your pension unnecessarily can reduce the benefits of compound growth, potentially costing tens of thousands by retirement.”
Instead, she recommends checking that you’re contributing as much as comfortably possible, consolidating any old pensions, and ensuring your investments are performing efficiently.
Beyond auto-enrolment, employer contributions and pension tax relief can provide what is essentially free money for your future.
Don’t panic – get professional advice if needed
Finally, Ms Purkess emphasised that reacting to rumours rarely helps.
She said: “Until it is announced, it remains speculation. Plans can change right up to the last minute, and most policies don’t take effect immediately.
“If you have significant savings or assets, consider consulting a financial adviser. Even with fees, professional guidance can save you more than it costs.”
For most people, she adds, minor changes won’t be catastrophic.
She stressed: “If you’re not maxing out the £20,000 ISA allowance, a reduction to £10,000 won’t really affect you. Focus on what you can control and take sensible, measured steps to protect your finances ahead of the Budget.”
