Britons are rushing to shield more of their wealth from Rachel Reeves's tax raids as investors seek ways to cut their exposure to future tax bills.
Demand for one popular tax-efficient investing strategy has surged since the start of the new tax year, highlighting growing concerns about protecting savings from the taxman.
New figures from AJ Bell show Bed and ISA transactions jumped by 76 per cent this spring compared with the same period last year.
The strategy allows investors to move shares, investment trusts, ETFs and other holdings sitting outside a Stocks and Shares ISA into the tax-efficient wrapper.
Sarah Coles, head of personal finance at AJ Bell, said: "People who use the process will already have investments outside a tax wrapper.
"The longer they leave these investments without protection from the taxman, the bigger the risk they will receive a dividend or crystallise a gain that could trigger a tax bill."
The opening weeks of the new tax year proved particularly busy for Bed and ISA transactions as savers looked to maximise their annual ISA allowance.
The process involves selling investments held outside an ISA and immediately buying them back within the tax-free account.
Most investment platforms handle the transaction on behalf of customers, making it a relatively straightforward way to increase tax protection.
Investors may still face a capital gains tax bill when assets are sold, depending on the size of any profits and their available allowances. However, once investments are held inside an ISA, any future growth or income is sheltered from tax.
Customers can deposit up to their annual ISA limit of £20,000 | GETTYThe transaction uses up part of your £20,000 annual ISA allowance, making it worth considering when you have unused capacity remaining.
"To complete a Bed & Isa process in full, investors typically need up to 10 days, or even up to four weeks, or longer, for those who first need to migrate share certificates on to a nominee account to sell them," explains Alice Haine of Bestinvest.
Digital transfers happen more quickly, meaning investors rarely miss significant market movements.
Investors face a barrage of unfavourable tax changes that have accumulated in recent years. The capital gains tax allowance has been slashed dramatically from £12,300 to just £3,000 annually, whilst the dividend allowance dropped from £2,000 to £500.
The ISA cut has been met with frustration from savers
| GETTYCGT rates on shares have also climbed significantly. Basic rate taxpayers now pay 18 per cent rather than the previous 10 per cent, whilst higher and additional rate taxpayers face 24 per cent instead of 20 per cent.
Dividend tax has risen by two percentage points, reaching 10.75 per cent for basic rate payers and 35.75 per cent for those on higher rates.
Frozen income tax thresholds compound the problem, as wage increases push people into higher brackets, automatically increasing their dividend and capital gains tax rates on investments held outside tax wrappers.
Further ISA reforms loom on the horizon. Chancellor Rachel Reeves has announced plans to cut the cash ISA allowance from £20,000 to £12,000 for savers under 65, with the remaining £8,000 required to go into stocks and shares ISAs. These changes take effect from April 2027.
For those looking to maximise their Bed and ISA strategy, Sarah Coles of AJ Bell offers several practical tips
| GETTYFor those looking to maximise their Bed and ISA strategy, Sarah Coles of AJ Bell offers several practical tips. Prioritise moving income-producing assets first, since dividend tax rates exceed capital gains rates and you have less control over when income arrives.
Losses can work in your favour too. "If you move loss-making assets, you can offset these losses against gains elsewhere when calculating how much capital gains tax is due," Coles notes.
Married couples and civil partners can transfer assets between themselves without triggering tax charges, effectively doubling their available allowances.