Home Money Keep calm and keep growing your savings – use tried and tested pensions and ISAs

Keep calm and keep growing your savings – use tried and tested pensions and ISAs

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Keep calm and keep saving: it will probably be weeks before the first budget is published.

Keep calm and keep saving: it will probably be weeks before the first budget is published.

Okay, can we have some answers now, please?

Taking care of our personal finances is supposed to involve long-term planning and careful budgeting, but that’s a lot harder when we’re making plans on shaky ground.

Will inheritance tax relief be cut? Will capital gains tax be slashed? Will pension tax relief be reviewed?

Labour’s manifesto was short on answers, and we will have to wait even longer for certainty: it will likely be weeks until the first budget, and even then there could be reviews and consultations before Labour shows all its cards.

But that doesn’t mean we have to sit back and wait to see what happens.

Using your tax-free allowances and tapping into your pensions and ISAs now gives you great protection against any future changes.

These are essential steps to follow that should serve you well.

After all, they are proven tools that have helped prudent households manage their finances despite countless shocks. Because, let’s face it, our wealth and savings have been under attack for decades and by successive governments.

Worried about an attack on your inheritance? Well, this has been happening since 2009, when the amount you could pass on to your loved ones tax-free was temporarily frozen at £325,000.

If the allowance had increased with inflation, it would have been worth more than half a million pounds today.

Worried your savings will be raided? The taxman is already expected to seize £10bn of savers’ savings this year, up from £1bn just four years ago.

Worried about a Labour raid on capital gains? Your allowance has already been slashed – it has fallen from £12,300 to £3,000 in just two years.

The response to these ongoing attacks is the same as for any new ones that may arise: pensions, ISAs and the use of all allowances, all of it.

But I would think very carefully before going any further and making changes to your finances based on what you think Labour might do.

For example, it may be tempting to sell a much-loved or profitable second home based on the intuition that Labour has its eye on homeowners’ profits.

Such a decision may pay off, but it may also leave you with deep regret if your suspicion turns out to be wrong.

As Laura Newman, head of senior financial planning at NatWest, told me as we digested the election results on Friday: “You can try to get ahead of things, but if you make a decision based on that and it doesn’t happen, it can have a detrimental effect on your finances.

“Decisions can only be made based on current legislation and the current situation.”

So don’t take chances. Instead, as Laura wisely says: “Keep calm and carry on. But stay informed. And check in regularly.”

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