Labour could bring in some key changes to ISA allowances in the Autumn Budget including a lifetime cap on how much you can save into the tax-free savings vehicle.

Labour could change ISA policy in the Autumn Statement (Image: Getty)

Experts at accountancy firm BDO have warned there could be a ‘sting in the tail’ as the Government looks to shelve plans set out by the previous Conservative administration for a British ISA allowance.

Private wealth tax partner, Elsa Littlewood, said: “Recent reports – although not yet officially confirmed by the Government – suggest the previous Government’s plans for a UK ISA have been shelved.

“This could feasibly be presented under the guise of ‘simplification’, or as part of a wider ranging reform to the ISA regime.

“While savers may be hoping that the originally proposed additional £5,000 per year allowance for the UK ISA would be added to the current £20,000 annual ISA limit, there could be a sting in the tail.

“It’s not impossible that the Chancellor could seek to impose a lifetime cap on ISA saving – perhaps set at around £500,000.

“If this were to happen, we would hope that the limit would be indexed to rise in line with inflation.”

Ms Littlewood also warned that other ISA allowances could be made less generous after the Autumn Statement.

She explained: “We could also see a reduction in the annual allowance available for cash ISAs, but an increase in the annual allowance for stocks and shares ISAs in an effort to support economic growth.

“We may also see changes to the rules on the usage of Lifetime ISA funds. Currently, these funds can be used by first time buyers for properties worth £450,000 or less.

“With rising property prices, this can limit options for first-time buyers, particularly in London and the South East, and the penalties can be quite punitive for those who find themselves in this position.”

Lifetime ISAs are a Government-backed scheme where any deposits are matched with a 25 percent bonus, with savers allowed to put in up to £4,000 a year, with a potential £1,000 bonus.

But the account has several important restrictions, such as that you have to be aged 18 to 39 to open an account and you can only make deposits until the age of 50.

The funds can only go towards your first property or can be accessed once you turn 60. If you withdraw funds for other purposes, there is a 25 percent penalty charge.

SEE MORE : 

HMRC warning as you need to sign this document now to avoid 25% Labour tax raid

Chancellor Rachel Reeves could raise several taxes in the Autumn Statement (Image: Getty)

Taxpayers planning to move around their assets have been urged to act now to sign a key document ahead of expected Labour tax hikes in the Autumn Budget.

Mark Routen, head of Tax at Hoxton Wealth, has issued a warning that Chancellor Rachel Reeves is likely eyeing up hikes to capital gains tax, inheritance tax and on pensions.

Sharing his predictions, Mr Routen said: “It is speculated that the rate of capital gains tax will be aligned to income tax.

“This could mean an increase from 20 per cent to 45 per cent in some cases, or in respect of property 24 per cent to 45 per cent.

“If you are considering selling an asset, to put in simply, you need to take action now and look to do it before the budget.”

He said those looking to sell assets need to take action now to get a key document in place even ahead of the actual sale.

The tax expert explained: “You do not have to complete the sale but get to the binding contract stage and this is the date that triggers the tax.

“You could also look to rebase the cost of any asset by selling and having your spouse purchase back or moving it into an ISA or corporate structure such as a family investment company.

Labour could increase several taxes in the Autumn Statement (Image: Getty)

“This could trigger an immediate charge but offer a potential saving of up to 25 percent long term.”

Turning to inheritance tax, Mr Routen said there could be an end to the reliefs for farmers and unquoted businesses, meaning now is the time to act.

He said: “If you are considering a gift, you should do it now while the gifts are available. There could be changes to the rate and other reliefs as well.”

He also said there could be “big changes” to pensions policy such as to the tax-free lump sum and tax relief on contributions.

The analyst warned: “Pension tax relief is very costly to the government and could come under attack in the budget.

“Labour may reduce the existing annual allowance of £60,000, or introduce a new flat rate of tax relief on pension contributions. Either way, higher or additional rate taxpayers will be the biggest losers.

“The message at this time is if you are considering a contribution make it before the budget and if you are looking to take your tax-fee lump sum also do this before the budget.

“The rate of tax on dividends could well be increased so if you are thinking of making a dividend or have large retained profits now is the time to consider making a payment.”