Rachel Reeves has given the strongest indication yet that she will target the wealthy with higher taxes in the Autumn Budget.

She has said that taxes on the rich would be 'part of the story,' as the Institute for Fiscal Studies warned that she may need to raise over £40billion.

In an interview with The Guardian this week, she said higher taxes on the wealthy will be part of the Budget. 

While Reeves has ruled out imposing a new wealth tax, a package of tax rises is likely, especially if the Office for Budget Responsibility downgrades growth forecasts, as is expected.

We look at which existing taxes might increase to make the wealthy pay more - and how you can protect yourself.

Pensions

Pensions are a big source of wealth, and there was plenty of speculation in the run-up to the last Budget that the Government would impose changes.

While the Chancellor dragged unused pension assets into the inheritance tax net from April 2027, it did not go as far as some experts feared, so she could raid pensions again this time around.

There are ongoing rumours that Reeves will change how pension lump sum withdrawals are treated. Currently, up to 25 per cent of your pension can usually be taken tax-free from the age of 55, capped at £268,275.

'It has long been one of the most attractive features of pensions, with people often using this to clear mortgages and debts ahead of retirement,' says Jason Hollands of wealth manager Evelyn Partners. 

'Carving this back to, say £100,000 would be highly unpopular for those with larger pensions meaning they would end up paying more income tax when accessing their pensions in retirement.

'It would also make it harder for people to drain pensions to reduce an inheritance tax liability'.

If the Government slash the tax-free lump sum, there are some options for those with large pension pots.

'Moving it into an appropriate trust, or gifting it in a structured way, can help move funds outside the estate and start the seven-year clock for IHT purposes,' says Ian Futcher, financial planner at Quilter. 

'It may also be more efficient than making smaller gifts over time from the taxable element of a pension. However, this should only be done as part of a well-considered plan, not as a knee-jerk reaction, as once money leaves the pension it loses its tax-efficient shelter.'

There is also a risk that unused pension funds could eventually be subject to both IHT and income tax, especially if death occurs after the age of 75 or on the second death of a married couple.

'For some, it may make sense to start drawing modestly from their pension earlier in retirement, managing income tax exposure year by year and reducing the size of the taxable estate,' says Futcher.

However, there is no one-size-fits-all solution, and the best move will depend on the size of your pension, income needs, family and long-term goals.

'But for those with substantial pension assets, the old advice to leave pensions untouched may no longer be optimal,' he adds. 'Early planning, expert advice and a willingness to rethink long-held assumptions will be key to navigating this changing landscape.

'We saw many people take their tax-free cash last budget in an attempt to mitigate against changes rumoured that never materialised. Unfortunately, once you take it out you can't put it back in, so people should once again think twice before making significant financial decisions based on hearsay.'

Capital gains tax

The Chancellor had the wealthy in her sights when she hiked capital gains tax rates in the 2024 Budget.

The tax, which is levied on profits from assets ranging from shares to second homes, increased from 10 to 18 per cent for basic rate taxpayers. Higher-rate taxpayers now pay 24 per cent, up from 20 per cent previously.

While a significant increase, it was less than many feared, with some fearing that she might align CGT rates with income tax. HMRC analysis shows that significant rises to CGT would be counterintuitive and reduce the tax take because of changes to investment behaviour.

Hollands says: 'To come back to CGT rates again only a year later seems unlikely and would send a poor signal to investors, but a modest increase cannot be ruled out and therefore anyone thinking of crystallising gains - especially while markets are record highs - might consider doing this before the Budget.'

Last year, the Chancellor took the unusual move of making the CGT hike effective on the day, including the hours before the announcement, so you should bear this in mind.

Dividends

There are rumours that Reeves is reconsidering the Cash Isa allowance to encourage more investment, but it doesn't mean investors are out of the woods.

Hollands suggests she could look at aligning dividend tax rates with income tax, which would affect business owners who draw income mainly from dividends.

The current rates are 8.75 per cent for basic rate taxpayers, 33.75 per cent for higher rate taxpayers and 39.35 per cent for additional rate taxpayers, compared to 20, 40 and 45 per cent for income tax.

'Increases to the rate of dividend tax or further cut to the allowance will further erode dividend income, particularly affecting basic rate payers, which tend to include pensioners who may be relying on dividends as income,' says Neil Wilson, UK investor strategist at Saxo. 

'The increasingly restrictive dividend allowance regime means it's more important than ever to find tax-efficient ways to invest - such as an Isa or Sipp.'

Futcher adds: 'Reviewing your investment portfolio and making sure you're using your Isa allowance can help shelter future gains and dividends from tax. 

'If you hold investments outside an Isa, it may be worth selling some assets each tax year to make use of your annual CGT exemption rather than allowing large gains to build up.'

Property taxes

There's a tidal wave of rumours that the Chancellor will overhaul property taxes, and landlords are likely to be one target.

Reeves could introduce National Insurance on income earned by landlords from rent.

Jonathan Hopper, CEO of buying agent Garrington Property Finders, says landlords are a 'soft target' for the Treasury, and that while NI 'won't cripple landlord income overnight, it's the final nail in the coffin.'

Nervy buy-to-let landlords should, however, wait until they've seen the details of any prospective changes.

'In terms of selling as a knee-jerk reaction, it would be short-sighted and you could find that you're selling in a very soft market and end up compromising on sell value compared to if you waited,' says Hopper.

Futcher adds: 'Anyone with rental income should make sure they are correctly reporting it and claiming all allowable expenses. Holding property within a limited company can sometimes help reduce the impact of tax changes, but this route has costs and complexities that need professional advice before taking.'

Residential owners may also be targeted. The Government could replace stamp duty with a national property tax based on the value of homes, possibly over £500,000. This would leave homeowners in the South East and London particularly affected.

Hopper says there is no reason for people to make any changes ahead of the Budget.

'If you have a life reason or strong motivator to carry on, then carry on. You could maybe leverage the uncertainty that's in the market, and it's a buyer's market at the moment. We're negotiating aggressively on things right now.'

Peter Stimson of MPowered Mortgages also advises people to carry on as normal. 'Whatever happens, the market will carry on as normal. I wouldn't change plans, because we can't predict what's going to happen.

'Residential buyers should carry on because people need somewhere to live. The market might pause for a bit, but we've always seen this.'

Inheritance tax and gifts

The Chancellor has already indicated she's keen to limit the amount families can inherit tax-free.

In the Autumn Budget, she capped the availability of Business Relief and Agricultural Relief, and halved the relief available on AIM shares.

Most significantly, the Government announced plans to bring pensions into the scope of inheritance tax from 2027.

Advisers say more families are using lifetime gifts to mitigate the impact of the changes, namely the £3,000 annual gifting allowance and unlimited individual small gifts of up to £250 per person.

To combat this and increase tax take, the Chancellor may introduce a lifetime cap on gifts, which Futcher says 'would mark a major departure from the current system.'

To combat this, investors may sell equities to gift cash to their family ahead of the Budget, but Wilson warns of the longer-term impact on pensions and investments.

If gifting forms part of your plans to mitigate IHT, it's a good time to review your longer-term goals, say advisers.

'Larger gifts might make sense if you're confident they won't be needed for your own retirement, but the key is to give within your means and document everything carefully,' says Futcher.

Elsewhere, the Treasury could remove the 'CGT uplift on death'. Currently, CGT liability effectively ends when an individual dies and the capital costs are uplifted to the value at probate. IHT is then charged depending on the value of the total estate.

Removing the capital uplift would mean beneficiaries would be responsible for paying tax on the gains made, as well as IHT. There would be very little that beneficiaries could to protect themselves from this measure, says Hollands.

Don't make rash decisions

There are always rumours in the run-up to the Budget, but the long lead-up time to this year's means it has reached fever-pitch.

Reeves will still be eyeing options, especially as she waits for the OBR's forecasts, so you should not make any rash decisions.

Futcher says: 'Many people are understandably wondering what, if anything, they should be doing to protect themselves as the budget looms and the talk of tax hikes gets louder.

'But while it's sensible to keep one eye on potential changes, it's never a good idea to make big, irreversible financial decisions based purely on speculation. 

'The best approach is to deal with the rules as they stand today and ensure your finances are structured as efficiently as possible under the current system.'