Like a tornado sweeping across the open plains, a frightening financial storm is hurtling our way.

For the prudent, the hard-working and the retired of this magnificent country, the financial consequences are going to be devastating – although if you’re quick and nifty, there is still time to batten down some of the proverbial hatches and protect yourself from a maelstrom of tax hikes.

After the Chancellor of the Exchequer’s downbeat assessment of the country’s public finances late last month – prompting her spiteful attack on pensioners and their right to the annual winter fuel payment – Sir Keir Starmer went into double-downbeat mode.

Standing in the rose garden at No 10 yesterday, the Prime Minister admitted that the Chancellor’s Budget, scheduled for October 30, would be ‘painful’, involving lots of ‘short-term pain’ (and, for sure, lots of long-term pain).

It hit home that the country is lurching back to the high taxation days of the Labour governments of the 1970s. 

Without wishing to overdramatise, we are seeing the start of a seismic shift in taxation policy.

As Money Mail has been warning ever since the General Election was called by Rishi Sunak in May, Labour is coming after a big slice of your money, while making it more difficult for many people to build retirement funds.

Millions of middle-class families should brace themselves for a slew of gruesome tax hikes this autumn and again in the new tax year starting on April 6. Inheritances, investments, and retirement savings are expected to be at the centre of the looming assault.

But the ruthless Chancellor could go even further if she chooses to speed up the planned increase in the state pension age – or force more people to pay National Insurance contributions on their income.

Mr Starmer said his government would be making ‘big asks’ of the public. 

‘Those with the widest shoulders should bear the heaviest burden,’ he added, sealing the fate of middle earners who have been sensible enough to save for the future.

So how will Labour plunder our finances, and what (if anything) can we do to mitigate the damage?

Reducing our ability to build a pension

Pensions – funds set aside to ensure our later years are financially secure and we are not a burden on the state – are expected to be one of Labour’s first targets.

Ms Reeves is said to be considering a raid on the pension tax relief that six million high earners receive on contributions.

But as with most tax attacks, it isn’t the ultra-wealthy who will collectively pay the price. 

Those on salaries of £50,271 to £125,140, who receive 55 per cent of all tax relief paid out on pension contributions, will be the primary targets.

Currently, when you pay into your pension, you get tax relief on the payment at your marginal rate of income tax. 

This means, for example, that a basic rate taxpayer receives 20 per cent tax relief on any money that goes into their pension, a higher rate taxpayer receives 40 per cent and an additional rate taxpayer 45 per cent. 

But Ms Reeves and Treasury officials seem eager to replace this with a flat rate of tax relief at 30 per cent.

Figures from HM Revenue & Customs show that the net cost of providing pension tax relief climbed to £48.7 billion in the tax year 2022/23 – up £1.1 billion from the previous year. 

Similarly, the amount you can pay into your pension annually could be cut.

At present, you can pay in up to £60,000 a year and receive tax relief. This is known as your ‘annual allowance’. 

If you are a higher or additional rate taxpayer and have money that you can do without until you access your pension, it may be worth making a lump sum contribution before the Chancellor gets the opportunity to tinker with tax relief.

Tax-free cash from a pension

For those over 55 years old, pension tax-free cash could also be in the crosshairs, warns Tom Selby, of investment platform A J Bell. ‘The 25 per cent tax-free pension cash will inevitably come up for review,’ he says.

A report by left-wing think tank the Fabian Society said the Government could raise large amounts of money by capping the amount you can take out of your pension, tax-free, at £100,000.

‘This would remove the incentive to save into a pension and would be deeply unpopular, but the Chancellor has shown she’s not afraid of making unpopular decisions,’ Mr Selby says.

Those who planned to withdraw their pension lump sum in the coming year or two, for example to pay off a mortgage, should consider cashing it in now, says Jason Hollands, of wealth manager Evelyn Partners.

‘It makes sense to take the money if your intention was to do it anyway and you are simply accelerating plans,’ he says.

However, it is important that you do not make any knee-jerk decisions and take out your pension lump sum if you had no pre-existing plans to spend the money as you could forego the inheritance tax privileges of keeping it in a pension, he adds.

You may be giving up better investment returns, too, particularly if you leave the money in a low-paying savings account.

Fiddling with the state pension

If the Government wants to save large amounts of money fast, it could hike the state pension age.

This is due to rise to 67 by 2028, but accelerating these planned increases could save ‘billions of pounds’, according to Mr Selby.

He adds: ‘People would be waiting longer for the state pension and struggling. 

But we have seen from the winter fuel allowance decision that this Government doesn’t seem perturbed about doing things that are unpopular and hitting the pockets of older people.’

Widening the NI contribution net 

Although Labour has said it will not increase National Insurance (NI) contribution rates, it could widen its net.

Pensioners could be roped into paying NI on their retirement income – despite having paid it their whole working lives.

Robert Salter, of tax firm Blick Rothenberg, says landlords could also be required to pay it on letting income.

More tax from inheritances 

Inheritances are another rich source of money that the Chancellor is expected to pilfer.

Ms Reeves has already been urged by leading think tanks to consider an inheritance tax (IHT) raid on pension pots.

Pensions have been a haven for those who want to pass on their wealth without the taxman taking a cut.

And so, millions of people have ploughed money into retirement savings. But the Chancellor could make retirement funds part of your estate and therefore subject to tax on death.

Adding pensions to the value of an estate would drag far more people into the IHT net.

Ian Cook, chartered financial planner at wealth manager Quilter Cheviot, says Ms Reeves could also make reforms that close existing reliefs or increase tax rates on inheritances.

He says: ‘If you’re planning to pass on significant assets, it might be beneficial to review your estate planning as a matter of urgency.

‘Consider making use of current IHT exemptions, such as annual gift allowances, and explore options like setting up trusts to manage and protect your wealth for future generations.

‘These strategies can help reduce the tax burden on your estate, ensuring more of your wealth is passed on to your heirs, especially if the rates are raised or thresholds lowered.’

Gifting money while you are alive is one of the easiest ways to pass money to loved ones without incurring tax. There is no IHT to pay on gifts made from regular, surplus income if you live for seven years after making them.

So those worried about stricter rules on inheritance or pensions could redirect pension savings as gifts if the sole purpose is cutting an inheritance tax bill.

You can gift as much as you like – and to whomever you like – if it comes out of your income. That could include giving from your salary; an income from buy-to-let properties; dividends if you own your own company; or income from your investment portfolio.

Hiking capital gains tax rates 

One of the most talked-about potential changes is an increase in capital gains tax (CGT).

This is levied on the profit made from selling certain financial assets – shares for example, or a buy-to-let. Rates are currently between 10 per cent and 28 per cent.

But Ms Reeves could use October 30 to bring CGT rates in line with income tax rates, pushing the upper band up to 45 per cent.

Mr Hollands says even if the rates are not brought in line with those of income taxes, they are likely to be raised.

Capital gains tax could also be imposed on profits from financial assets when someone dies, which it currently isn’t, he adds.

Mr Cook says: ‘If you hold assets that have appreciated significantly, such as property or investments, it may make sense to realise some gains now, before any changes that result in higher tax rates coming into effect.’

Most commentators believe that tax-friendly Individual Savings Accounts (ISAs) will be left alone for now (a lifetime cap is more possible than probable).

These plans allow adults to invest (or save) up to £20,000 a tax year in shares or cash – with all gains and withdrawals tax-free. 

Money can also be squirrelled away on behalf of children, although the annual contribution cap is smaller at £9,000.

If CGT rates are hiked, Isas will be more attractive than ever. So, hold most of your investments in these plans (plus pensions).

So, yes, lots of ifs and buts. But for sure, Labour is coming after your wealth. Ensure you have as much of it as possible protected before the party’s tax tornado strikes.