With Halloween nearly upon us, Chancellor Rachel Reeves could have something spooky lurking in the shadows. 

Some commentators believe she could be delivering an Autumn Budget of ‘tax rises and spending cuts’ but nobody knows for sure. Terrifying stuff. 

What we do know is that the new Labour government’s first budget takes place on Wednesday 30 October. Talk of ‘difficult decisions’ and ‘fiscal black holes’ has sparked fears that personal allowances around your savings and investments could be affected.

Here’s a quick look at what the budget could mean for you. 

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What could be changing? 

What we know so far is that changes to capital gains tax, inheritance tax and pensions are on the cards. While unconfirmed, these look the most likely as the Government seeks to raise tax revenues.

Let’s take a look at how any proposed changes could affect the accounts and products Chip offers. 

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Investing

With Capital Gains Tax (CGT) one of the rumoured changes, this could mean a cut to the amount of capital gains you can earn tax-free (currently £3,000).

Capital Gains Tax is a tax on the profit when you sell an asset that's increased in value. It’s the gain you make that’s taxed, not the amount of money you receive.

Eg: If you bought a Rolex for £5,000 and sold it for £12,000. You've made a gain of £7,000. 

This tax applies to selling investments, so if you make a profit when you sell down an investment fund, this could be subject to a 10% tax. This would only apply to investments held in a General Investment Account (GIA).

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than your original investment. Chip does not provide financial or tax advice and this is not a personal recommendation.

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Saving

The good news is that there has been no talk of any adjustment to the £20,000 ISA allowance, with any changes to these hugely popular accounts off the table as far as we know.

The same goes for the Personal Savings Allowance, which just to remind you, is the amount of interest you can earn tax-free (currently set at £1,000). There hasn’t been any signals that this will be in the chancellor’s crosshairs. 

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So what should I do?

While we won’t know for sure until the day of the budget, there are sensible steps you can take right now to protect your wealth by saving and investing within an ISA.

With a Stocks & Shares ISA, all your investment returns are tax-free so there’s no need to worry about any capital gains tax or going over your tax-free allowances. Remember since April 2024, you can open multiple ISAs of the same type in the same tax year. 

And the same goes for savings, a Chip Cash ISA means you can earn as much interest as you like without worrying about any taxes hiding around the corner, as all your interest is tax-free.

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Lastly, remember this

Whatever the outcome of the Autumn Budget it’s important to take a breath. Making snap decisions based on what’s immediately in front of us can often hurt our future plans. Don’t do anything that doesn’t align with your long-term goals. 

Remember policies and governments change so if you’re saving and investing towards a long-term goal with a time-horizon way off into the future, it might not make sense to react to things happening today. 

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We’re here to help

Please contact our team if you have any questions or concerns about any changes that might affect you. Remember, they can’t give financial or tax advice but are always there to help. Contact us in-app or email hello@getchip.uk.

All the best,
Stephen

NB: Always remember that tax treatment varies according to individual circumstances and is subject to change and this should not be taken as financial or tax advice.