Autumn Budget – what we’d like to see for savers and investors

It’s easy to see the looming Budget as just a threat to your finances, or purely as a way for delivering tax rises.

But that overlooks the huge potential a Budget has to make a positive difference for savers and investors. It can end damaging speculation, support an investment culture and make a positive change to people’s finances.

In fact, there’s six ways the Budget could make life better for savers and investors.

This article isn’t personal advice. If you’re not sure if an action is right for you, ask for advice. ISA, pension and tax rules can change, and their benefits depend on your circumstances. Scottish tax rates and bands are also different. Remember, unlike the security offered by cash all investments and any income they produce rise and fall in value, so you could get back less than you invest.

It’s a great opportunity for the government to rule out continued speculation over the future of the Cash ISA, where rumours were frequent over the last year.

These are a good choice for the money you need to access in the next five years, so a cut to the allowance would simply see diligent savers being punished with tax bills on their savings.

For money they don’t need until the long-term, investments are a sensible option, but changes to the Cash ISA allowance won’t turn savers into investors.

The work the government is doing to build an investment culture is the key to giving people the confidence to make the most of the power of investment.

Helen Morrissey

Head of Retirement Analysis

Speculation is rife about tax-free cash again, raising the risk that people are persuaded to take cash from their pension before it makes sense for their finances, leaving them in a worse position financially.

Labour said during the election campaign that the 25% tax free lump sum remains a permanent feature of the tax system.

Reiterating this and keeping this promise would help reduce fear and stop people needlessly eroding their long-term resilience.

Related article

Should you take your tax-free lump sum before the Autumn Budget?

Clare Stinton

Head of Workplace Saving Analysis

There have been questions raised about the future of pensions tax relief, but any changes to this need to be considered alongside the Government’s aim to improve pensions adequacy.

New figures from the HL Savings and Resilience Barometer show that higher earners face the biggest pension gaps in the UK - at £64,800 – compared to a gap of £1,250 among the lowest earners.

Care needs to be taken over changes that could potentially lead to an even bigger shortfall.

There are more than 1.3mn Lifetime ISAs open, offering the potential to make a major difference to young people struggling to get onto the property ladder and to those putting money aside for the future but unsure about tying it up in a pension.

After the Treasury Select Committee reported earlier this year, the government needs to commit to its future.

Hargreaves Lansdown has also called for tweaks to the Lifetime ISAs that could make a real difference, especially to the retirement savings of self-employed people – namely cutting the 25% penalty for accessing money for purposes other than buying a first home or for after age 60 and allowing people to open a Lifetime ISA until the age of 55, to cover those who start working for themselves later in life.