Savers, investors, entrepreneurs and landlords are to be hit with a £6.8 billion “penalty on prudence” that will kick in over the next few years.

Rises of 2 percentage points across a swathe of taxes in the chancellor’s budget on Wednesday mean that the rate of dividend tax will go up to 10.75 per cent for basic-rate taxpayers and 35.75 per cent for higher-rate taxpayers from April. Additional-rate taxpayers will still pay 39.35 per cent. And the tax rate on savings interest and rental income from property will rise to 22 per cent for basic-rate taxpayers, 42 per cent for higher-rate taxpayers and 47 per cent for additional-rate taxpayers from April 2027.

The amount you can save into a cash Isa will be cut from £20,000 to £12,000 for under-65s from April 2027 and income tax thresholds will be frozen for an extra three years — until April 2031. A tax grab on salary sacrifice schemes will also limit the amount you can pay into your pension each year while saving on national insurance. This kicks in from April 2029 and the government expects it to raise £4.7 billion in its first year.

Gary Smith from the wealth manager Evelyn Partners said: “All these measures constitute a penalty on prudence. They will deter many from building financial resilience and the implication is that there is something wrong with creating an income for yourself from anything but paid work.”

Those prudent savers and investors have time, however, to protect their finances before the effects of Rachel Reeves’s changes sink in. Here’s how.

Save your savings

Those worried about paying more tax on their savings after a cut to the cash Isa still have the full £20,000 Isa allowance for the rest of this year and 2026-27.

This means you can still save up to £40,000 into a cash Isa — £80,000 for a couple. You cannot carry over any unused Isa allowance, but you can usually transfer old Isas into new, better-paying accounts without using up any of this year’s allowance.

The top easy-access Isa rate is 4.47 per cent from the savings app Moneybox, which includes a 0.77 percentage point bonus for the first year and allows transfers. You can get 4.3 per cent on a one-year fixed Isa from Tembo, 4.17 per cent for two years from Secure Trust Bank and 4.13 per cent for five years from UBL.

A net £26.9 billion has been deposited into cash Isas since April, according to the Bank of England, and Laura Suter from the wealth manager AJ Bell said she expected cash Isa deposits to “explode in the next couple of years”.

Isa rates are usually lower than rates on non-Isa accounts, to reflect the tax benefit. The highest rate on a non-Isa easy-access account is 4.51 per cent from Monument Bank and the best one-year rate is 4.5 per cent from Investec.

Rosie Hooper from the wealth manager Quilter suggested that couples who have used up their personal savings allowances could hold taxable savings outside Isas in the name of the lower earner, to reduce their tax bill.

• How to beat the budget squeeze on your savings

Premium Bonds could also make for a good cash Isa alternative. You can hold up to £50,000 and instead of earning interest, you get the chance to win cash prizes in the monthly draws. All winnings are tax-free and prizes range from £25 to two monthly £1 million jackpots.

Each £1 bond has a one in 22,000 to one chance of winning some sort of prize and the expected prize rate is 3.6 per cent a year. Your money is 100 per cent guaranteed because it is held by the Treasury-owned National Savings & Investments and you can withdraw it at any time.

And if you have children, make use of the £9,000 annual Junior Isa allowance. You can get cash and investment Junior Isas and pay into one of each type in each tax year. They can be opened by parents or legal guardians for those aged under 18, and then anyone can pay into them. The child can manage the money at 16 and withdraw it at 18.

Protect your pension

With changes to salary sacrifice schemes due to come in from April 2029, experts said there is still plenty of time to maximise the benefits.

Under salary sacrifice, you “give up” a portion of your wages before tax and national insurance is paid. This saves employees national insurance at 8 per cent on earnings between £12,570 and £50,270 and 2 per cent above that. From 2029 you will only be able to sacrifice £2,000 a year of salary while still benefiting from national insurance relief. Anything paid in to your pension above that amount will still get income tax relief, however.

“Anyone who can afford to may want to max out their contributions this tax year, then scale back later once the benefits are locked in,” said Lisa Picardo from the pensions consolidation firm PensionBee.

You can pay in up to £60,000 into your pension each year and any unused annual allowance from the past three tax years can also be carried forward.

The Times’s salary sacrifice calculator shows that an employee earning £75,000 who was contributing 5 per cent of their salary — matched by their employer — and wanted to retire in 2039 would lose £4,807 from the changes. They would need to contribute an extra £200 a month until the new cap was implemented to offset the loss.

• How to beat the pension tax raid on salary sacrifice

Minimise your investment tax bill

For those whose dividends come from investments, consider holding them in an Isa or a pension. There is a practice known as “bed and Isa”, which involves selling investments held outside a tax-free wrapper and then buying them back inside, ensuring that future dividends will not be taxed.

Married couples can also shift assets between them under what is known as an interspousal transfer, without having to pay capital gains tax. Similarly to your savings, if you have to pay tax on dividends, consider shifting the assets into the name of the lower earner, or to the one who has not used up their dividend or capital gains tax allowance.

Small business owners often pay themselves a combination of a salary and dividends. Nimesh Shah from the accountancy firm Blick Rothenberg said: “The new higher rates do not take effect until April, so you should consider taking dividends in this tax year, where they will be taxed at the lower rates.”

Prop up your property portfolio

Landlords have been hit by a 2p tax rise on their rental income from April 2027. The surcharge will be applied across the board, increasing property income tax to 22 per cent for taxpayers on the basic rate, 42 per cent on the higher rate and 47 per cent for those paying the additional rate.

Since 2021 those who own properties in their own name have had to pay tax on their full rental income then claim back a 20 per cent tax credit on mortgage interest. This left higher and additional-rate taxpayers worse off.

A basic-rate taxpaying landlord who earned rental income of £16,478 a year while paying £7,875 on their mortgage would pay £699 in income tax and a higher-rate taxpaying landlord £2,973. This would rise to £769 and £3,043 from April 2027 according to the estate agency Hamptons, assuming that mortgage interest credit was increased to 22 per cent. If it wasn’t, their income tax bills would climb to £926 and £3,200.

Company landlords, however, can still fully deduct mortgage interest from rental income when working out their taxable profits, and can also offset other expenses such as replacement fixtures.

The rate of corporation tax is 25 per cent — 19 per cent for those with profits below £50,000 — lower than the higher and additional rates of income tax. A company would pay only £664 in corporation tax on the same sums, Hamptons said.

Hamptons said there were 6,493 buy-to-let company incorporations in September, the most in a month since it began keeping track in 2007, and 51,295 since the start of the year — the busiest first nine months of a year since 2007.

David Fell from Hamptons said: “The budget changes will provide an additional incentive for landlords with homes in their own names either to sell up or move homes into a company structure.”

Incorporation can come with large upfront costs, however, so it is only really worthwhile for those who are in it for the long term. Someone transferring ownership of a rental property into a company usually has to pay stamp duty on the value, including the additional property surcharge, because it is treated as a sale. Capital gains tax can also be due if the value is higher than when the property was first bought.