How to protect your wealth from the new Labour government

So as expected, we now have a new Labour government and it’s likely you are going to need to protect your wealth.

In this video I’m going to go through some of the rumours and what could possibly be coming down the track. I’ll also share what steps you can take to get yourself ready to protect your wealth.

The Institute for Fiscal Studies (IFS) reported recently that the UK has the highest debt level for over 60 years with a huge amount of spending going on paying the interest on that debt as well as welfare bills.

Public services are seen as struggling.

So, the IFS indicate that it’s inevitable tax rises are needed. Unless we plan to shrink the state and cut public services. That doesn’t seem likely as the recent trend seems to be a bigger and bigger state.

There’s an expectation that it’s the government that should do more and get involved in more.

Now, this video isn’t necessarily a dig at Labour. I could have filmed something very similar had the Conservatives remained in power as we currently have one of the highest tax burdens for over 70 years. Something the Conservatives have presided over.

But it is Labour now in power, so we have to focus on them.

Already, you can see that taxes have to rise somewhere as even part of their ‘first steps for change’ includes recruiting more doctors, border security, police and teachers.

Labour have said they will not increase Income Tax, National Insurance or VAT.

First of all, we can’t believe any promise from any government. It’s stupid to make them. Even if they had all the best intentions in the world on keeping their promises, circumstances change.

Who knows what’s about to happen next in the world. Few would have predicted a global pandemic a few years ago.

When circumstances change, plans have to adapt so don’t rely on Income Tax, National Insurance and VAT not increasing.

Also, get ready for a comment along the lines of, “now we can see the books, the state of the public finances we have inherited is much worse than we realised”.

It’s actually pretty certain you will be paying more Income Tax in the future anyway by virtue of the fact Income Tax thresholds have been frozen. As you are paid more, earn more interest and dividends in the future, more of it will fall into higher tax bands.

So where else might Labour get creative with the tax system.


- Capital Gains Tax
- Inheritance Tax
- Pensions

Steps to take to protect your wealth

It’s a good idea anyway to make sure you have a globally diversified portfolio for your pension and Investments.

I would be very wary of holding too much of your investments in small AIM listed shares that qualify for Business Relief. If your goal is to avoid Inheritance Tax then you should look at a diversified approach which could mean, more spending, gifting and whole of life insurance.

As for property and investments that you were planning to sell anyway, you may want to do this sooner rather than later.

On the pensions front, until we hear otherwise, it still makes sense to contribute as much as you can, particularly if you benefit from higher rate tax relief. It’s never a bad thing to do this earlier rather than later as the longer your money is invested the more chance it has for better returns.

I wouldn’t advocate taking the tax-free cash lump sum yet because as soon as you take it, you have locked the 25% forever. If you don’t need the money you are going to have to put it somewhere and you will then likely start paying tax on it anyway.

If you are really concerned, perhaps start phasing some of your tax-free cash but only if you need the money and aren’t just going to hold it in cash.

Also, get things organised so you are ready to move quickly if needed. This could mean consolidating pensions into one that allows ‘flexi-access drawdown’. This ensures you are ready to withdraw money quickly if needed.


Of course, at this stage nothing is certain and we won’t know for sure whether any of these rumours will be true until something is announced.

You would like to think that were any major changes to be announced, we would be given time before any deadline was imposed. However, we can’t be certain this will be provided.

I’m not one for recommending you make any big long-term impacting decisions before we know more facts. You could end up damaging your wealth even more by just acting on rumours.

What I would say is that you need to remain vigilant and flexible. Don’t have all your eggs in one basket.

After 14 years of Conservatives one thing is for certain, expect change.

#labourparty #labour #protectyourwealth