3 things HL clients are doing ahead of the 2024 UK Autumn Budget

Endless speculation about what might be in the 2024 UK Autumn Budget is only natural after a change of government.

The risk is that it sparks panic and persuades people to do things they’ll come to regret later.

The good news for HL clients is that there are three very sensible moves they can take right now, and huge numbers of them are doing exactly that.

This isn’t personal advice. ISA, pension and tax rules can change, and their benefits depend on your circumstances. If you’re not sure what’s right for you, ask for financial advice. Remember, all investments can rise and fall in value, so you could get back less than you invest.

We’ve seen a 71% surge in people maxing out their Self-Invested Personal Pensions (SIPPs) so far this tax year, paying in £60,000.

For some people this will be in response to rumours that the chancellor might have the annual allowance or tax relief in her sights.

Neither of them is a shoe-in. But if you were planning to pay into your pension in the current tax year, and have the available funds right now, it makes perfect sense to consider acting sooner rather than later.

Given that higher and additional-rate taxpayers could have the most to lose from a change in tax relief, they also have the most to gain from prompt action. And for many people, these additional funds are vital.

Hargreaves Lansdown’s July 2024 Savings and Resilience Barometer report showed that among the highest-earning quintile household, two thirds of people are on track for a ‘moderate’ retirement income – which is set at £25,000 per year for a single person and £36,480 for a couple.

However, many of them will be used to spending much more than that and will be in for an income shock in retirement.

It means there’s no room for complacency about the amount high earners are saving for retirement.

Remember, you can only access money in a pension at 55 (rising to 57 in 2028).

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Almost a third more HL clients are maxing out their Stocks and Shares ISAs this tax year, investing their £20,000 ISA allowance.

ISAs are one of the most effective ways to protect your savings and investments from tax.

With rumours of a possible rise in capital gains tax (CGT) constantly circulating, the fact there’s no CGT to pay within a Stocks and Shares ISA is a major attraction – and dividends are also tax free.

You can invest new money, or alternatively, you can protect existing investments outside an ISA or pension by using the Share Exchange (Bed & ISA) process.

It lets you sell investments outside an ISA or pension – keeping in mind your £3,000 CGT allowance when you sell – and move them into the ISA or SIPP wrapper.

That way you can use your CGT allowance to realise gains, and simultaneously protect this slice of investment from CGT for good.

Another common trend among HL clients is maxing out Junior ISAs (JISAs) for children under the age of 18.

The number of HL clients paying £9,000 into a JISA has shot up by two fifths in the current tax year, as they secure the allowance while they have certainty.

This money is tied up until they’re 18, but it’s a great way to help provide an essential nest egg for them to start adult life. It grows entirely free of tax, and then rolls over into an adult ISA – where it remains tax free.

If you have the cash available, it might make sense to max out yours and your child’s allowances.

However, you don’t need to have these kinds of sums of cash to make a real difference to your position. The key is to do whatever makes sense for your finances, as soon as you can afford to do so, while you still know where you stand.