Savers warned ISA shake up 'in the pipeline' as Rachel Reeves eyes 'devastating tax hikes in the Autumn'

The Chancellor's recent spending review has prompted speculation about tax raids and reforms to savings vehicles.

Myron Jobson, Senior Personal Finance Analyst at interactive investor, warned that "changes to the ISA regime, inheritance tax, and pension rules are all in the pipeline" as the Government grapples with rising debt servicing costs and public sector spending demands.

The uncertainty has left many savers concerned about the future of their tax-efficient savings as the Treasury seeks ways to fund its investment programme.

Jobson explained that the spending review "tees up what is set to be the most consequential Budgets in a generation come autumn".

He highlighted the Government's challenge of balancing infrastructure and healthcare investment with the need to drive economic growth whilst remaining within self-imposed fiscal rules.

"Given the tight budget envelope, something will inevitably have to give," Jobson said. "That could mean cuts in other areas, a rise in taxes - either directly or by stealth via the extension of frozen tax thresholds - or a combination of both."

He warned that "the burden may fall more heavily on households already grappling with a rising cost of living".

The Prime Minister avoided ruling out further tax rises in the Commons, despite last year's Budget imposing the biggest increase for a single fiscal event on record.Reeves added fuel to the fire by telling MPs that day-to-day spending must be covered by 'tax receipts'.

The constant changes to personal finance rules make it difficult for people to plan with confidence, particularly around long-term goals like retirement, he added.

Kevin Mountford, co-founder of Raisin UK, urged savers to take proactive steps amid the uncertainty. "While these plans could boost the economy in the long run, many people may not feel the benefits straight away, especially with tight public spending and the risk of future tax rises still on the table," he said.

With living costs remaining elevated, Mountford emphasised the importance of making savings work harder. He recommended that people "swap to higher-interest savings accounts, explore cash ISAs, or consider fixed-term bonds".

"It's also important to be prepared by reviewing tax allowances, keeping an eye on government updates, and planning for possible changes to tax or policy later this year," Mountford advised.

The TaxPayers' Alliance has strongly criticised the spending review, warning of impending tax increases.

John O'Connell, chief executive of the organisation, said taxpayers "stare down the barrel of yet more devastating tax hikes in the Autumn, all to fund a profligate, wasteful and bloated public sector".

O'Connell argued that politicians have "failed to meet the challenge of fixing ballooning welfare bills and getting people back to work, meaning the inevitable fiscal crunch looms large".

He called for spending to be brought under control to enable tax cuts and reduce national debt.

Darwin Friend, head of research at the TaxPayers' Alliance, questioned the Chancellor's decision to reinvest savings into public services "when the national debt is heading towards 100 per cent of GDP".

Shadow Chancellor Mel Stride has issued stark warnings about the autumn Budget, claiming Rachel Reeves will be choosing from a "Corbynist catalogue" of tax rises.

He challenged the Chancellor directly, saying: "The Chancellor knows she will have to come back in the autumn with more tax rises to fund these plans. Or can she assure us right now that this is not the case? Yes or no."

Stride revealed that "the Deputy Prime Minister has helpfully provided her with an entire brochure of tax rises that she will no doubt be perusing over the summer".

He branded Reeves' spending review speech as a "masterclass in delusion", criticising her optimistic tone.

"Her tone today suggests that all is well, the sunny uplands await. What a hopeless conceit," Stride concluded.