"Whoever wins the election we are unlikely to see any shift in these frozen tax thresholds, so we will continue to see the number of older taxpayers climb in the coming years. Older taxpayers may look to manage their tax bill by choosing to draw an income from their Isas rather than Sipp in the first instance as income taken from an Isa is tax free," she added.
Nichola Hyett, investment manager at Wealth Club said these sorts of "stealth tax rises" were "beloved" by politicians.
He explained: "Unsurprisingly, neither of the major political parties looks likely to unfreeze the tax bands after the election. Expect the fiscal drag to continue in the years to come.
"As things stand there are ways for investors to mitigate some of the tax pain. Pensions allow you to save free of income tax, and are an excellent tool regardless of which tax bracket you fall into.
"For those higher earners who can take on a bit more risk, Venture Capital Trusts or EIS qualifying investments might be worth considering. Investors could potentially qualify for income tax relief of 30% in return for backing UK start-ups, with scope for tax free returns thrown in as well. Bear in mind though that these are risky, long-term investments – and should only be considered if you can afford to lose the money.”
alina.khan@ft.com
