The last chance guide to beating the Budget, by JEFF PRESTRIDGE: You haven’t

It’s nearly time to discover what horrors the Chancellor of the Exchequer has in store for our savings and household finances.

If commentators across the political divide have read the runes right, Rachel Reeves’ Budget will be short on glee and long on financial pain for a majority of Daily Mail and This is Money readers.

Although there will be welcome measures aimed at combating the cost of living crisis, tomorrow’s Budget will herald a vicious financial assault on those of us who strive valiantly to better ourselves through a mix of hard work and thrift.

In short, the expected £30billion tax grab is likely to be as devastating to the finances of middle class households as the National Insurance attack was on UK businesses in last year’s Budget.

Whether it’s our home, savings, pensions, or investments, all will be smothered in a thick coating of extra taxes to pay for Ms Reeves’ inability (refusal) to keep a lid on welfare spending (north of £300billion and rising exponentially).

For many, the Budget will be a bitter pill to swallow. But please don’t despair or bury your head under the settee cushion as Ms Reeves spouts forth. Fight back.

Here, we identify the key attacks on your wealth likely to feature in tomorrow’s Budget.

More importantly, we look at how you can mitigate their financial pain: almost as soon as the Chancellor sits down from delivering her second (and probably last ever) Budget – although Ms Reeves insists she is here to stay.

If commentators across the political divide have read the runes right, Rachel Reeves’ Budget will be short on glee and long on financial pain for a majority of Money Mail readers, writes Jeff Prestridge

Pensions

Saving for retirement via a tax-friendly pension will become more difficult as a result of tomorrow’s Budget:

Reason 1: An attack on ‘salary sacrifice’ company pensions will spearhead the assault.

Although Ms Reeves will present it as an essential closing of an expensive tax loophole, the curbing of such schemes will have adverse financial implications for millions of workers who use them to save for retirement.

One in three private sector employees currently save into them, but Reeves is keen to recoup a big chunk of the annual £4.1billion lost in National Insurance (NI) revenue as a result of the clever way they are set up.

In basic terms, a worker gives up (sacrifices) a portion of salary and in return the employer pays an equivalent sum into their pension pot.

By doing this, the worker pays less NI on a salary reduced by the sacrifice, resulting in more take home pay at the end of the month.

The employer also benefits from a lower NI bill because they don’t pay it on the salary diverted into the worker’s pension.

If such pension plans are either restricted in the Budget (for example, through a limit on the amount of salary that can be sacrificed) or done away with altogether, workers will see a cut in take home pay.

Saving for retirement via a tax-friendly pension will become more difficult as a result of tomorrow’s Budget

Some would likely respond by trimming back their pension payments.

Employers, still reeling from the higher NI costs imposed on them in last year’s Budget, could make matters worse by reducing the employer contributions they make into workers’ pension funds.

How to react: It is unlikely any restriction on salary sacrifice pensions will come in until (at the earliest) the start of the new tax year in April.

This is primarily because of the time it will take employers and scheme managers to adapt pension funds to any new regime.

So, if you are paying into such an arrangement (check with your employer if you are unsure), there is NO need to panic.

Keep squirrelling money away into your pension and under NO circumstances stop your payments (you’ll regret it in later life).

Indeed, if changes don’t come in until April, consider increasing your ‘sacrifice’ now, thereby boosting your pension funding before the new rules come in.

Speak to your employer or pension scheme administrator if you are keen to do this.

Reason 2: Apart from restrictions on salary sacrifice, look out for any measures (attacks) designed to make it more difficult to fund your pension.

These could include a trimming of the £60,000 annual limit on pension contributions eligible to receive tax relief.

Also, there might be an announcement on reform of tax relief. This could pave the way for the axing of the current system where savers enjoy tax relief on payments according to whether they are a 20, 40 or 45 per cent taxpayer.

In its place could come a flat rate (say 20 or 30 per cent).

How to react: Neither measure would be introduced straight away. If a cut in the annual limit is announced, it would probably come in from the start of the new tax year in April. Any reform to tax relief…