UK Election Policies and Their Impact on Your Finances

The 2024 UK general election is fast approaching, with 98 different political parties standing and 459 independent candidates spread across 317 constituencies. Labour currently holds a lead in the polls, followed by the Conservative & Unionist Party, Reform UK, Liberal Democrats, Green Party, Scottish National Party, then Plaid Cymru. Accurate as of 12 June 2024. During this time, it’s important to understand how the policies of key parties might impact your finances.

In this article, we explore leading parties’ election policies and their potential impact on your finances, particularly focusing on pensions and retirement planning, investments, tax and National Insurance, by looking at the manifestos from the main political contenders and providing insights on how these policies could shape your financial future.

Retirement Planning

The state pension age is currently 66, although this is set to rise to 67 by 2028 and 68 by 2046. The Conservatives have already pledged to keep the triple lock, where the UK state pension rises in line with the highest out of inflation, average earnings, or 2.5%, and increase the personal allowance for pensioners. The personal allowance is currently £12,570 a year, which the Conservatives froze until 2027-28, and the state pension is currently around £11,500 a year.

By freezing the personal allowance, the government introduced a stealth tax. More people can exceed this allowance when their income rises to beat inflation, which has been higher than the 2% target for several years. So, by increasing the personal allowance for pensioners, they can pay less tax.

The Labour Party, liberal Democrats and Green Party have also confirmed intentions to keep the triple lock. Reform UK does not explicitly mention whether they plan to keep the triple lock in place for pensions and Plaid Cymru has previously said they plan to retain the triple lock, although their 2024 manifesto does not explicitly notion it.

Pensions

The Conservatives abolished the lifetime allowance in 2023, which imposed a limit on how much you could save for retirement without a tax penalty. It was replaced by the ‘lump sum allowance’ (LSA) and ‘lump sum and death benefit allowance’ (LSDBA), which aims to limit the overall tax-free lump sums people can get from their pensions. If the Labour Party wins the General Election, they plan to bring back the lifetime allowance, but this has not yet been outlined.

During last year’s Autumn Statement, Chancellor Jeremy Hunt revealed plans for a pension ‘pot for life’ so employees can choose their pension provider and reduce the risk of losing some pots. Employees wouldn’t have to transfer or combine pensions when they change jobs under this plan. Lost pension pots are a significant issue, with millions of pension pots currently worth billions of pounds lost. The Pensions Dashboard, proposed by the Conservatives, should allow savers to see all their pension data in one place, but it has been delayed until October 2026. The Labour Party supports the introduction of a pension dashboard. They also want to improve the consolidation of small pension schemes by giving The Pensions Regulator new powers to complete consolidations when a scheme doesn’t offer good value.

In 2023, the Conservative government announced plans to expand auto-enrolment reforms to boost total pension contributions by £45 billion over 30 years. It also pledged to remove the lower earnings limit for minimum contributions. Additionally, it proposed lowering the minimum age that someone qualifies for auto-enrolment from 22 to 18.

The Labour Party also supports expanding auto-enrolment. They initially developed auto-enrolment legislation as part of the Pensions Act 2008 before the coalition government rolled it out. The focus of Reform UK’s policy is on broader reforms and reviewing pension provisions to reduce complexity and costs.

Income Tax & National Insurance

The UK government has already cut National Insurance twice and intends to abolish it completely; however, this could take decades to achieve.

The Labour Party and Lib Dems have ruled out increases to income tax, National Insurance, capital gains tax, VAT and corporation tax.

Reform said it wanted a 20,000-pound annual threshold at which people start to pay income tax, up sharply from 12,570 pounds now. They’ve also stated in their manifesto, plans to abolish the Grief Tax, IHT, for all estates under £2m. Meaning some 98% of all estates. The rate above £2m will be 20% tax, with the option to donate to charity instead.

The Greens would raise the National Insurance rate to 8% on annual wages above £50,270. A new wealth tax would see a 1% charge on all assets worth more than £10m declared in a self-assessment tax return, increasing to 2% on assets above £1bn.

Investments

During the Autumn Statement, Hunt aimed to make the ISA regime more flexible by allowing savers to open multiple ISAs of the same type in a tax year without losing their tax-free allowance. He also announced that the British ISA would be introduced after a consultation so people could invest exclusively in the UK. This means investors will have an extra £5,000 tax-free annual allowance on top of the current £20,000 allowance – but this has been delayed until after the election.

The Labour Party wants to ‘simplify the ISA landscape’ to make it easier for people to invest, but nothing specific has been outlined just yet.

The Liberal Democrats aim to focus on promoting responsible investments and increasing the transparency of financial products. They advocate for the introduction of green ISAs to encourage environmentally friendly investments.

The Green Party is promoting sustainable investments and wants to reform the financial sector to support green initiatives. They propose green ISAs and other investment products that focus on environmental benefits.

Plaid Cymru proposes creating a Welsh Stock Exchange to encourage local investments, which could influence how ISAs and other investment vehicles are structured within Wales.

Whereas no ground-breaking details have been explained in much detail, each party’s approach to ISAs and investments varies, but they all aim to provide stability and encourage responsible investing to support economic growth and individual financial security.

 

Conclusion

Navigating these policies can be complex, but it’s important to stay informed about how they might impact your personal finances. Regardless of the election outcome, you should review your financial plans regularly and seek professional advice tailored to your individual circumstances. By doing so, you can make informed decisions that align with your long-term financial goals and ensure your financial well-being in the changing political landscape. Remember, while policies may shift, your proactive approach to managing your finances remains a constant and powerful tool in securing your financial future.

If you have any questions or concerns about how these election policies may affect your finances, please don’t hesitate to reach out to us. We’re here to provide the information and support you need to navigate these changes with confidence. Get in touch for a free initial consultation.

This article “UK Election Policies and Their Impact on Your Finances” is for general information only and does not constitute advice. The information is aimed at retail clients only.

Please do not act based on anything you might read in this article. For personalised advice or further information, please contact us directly at info@bee-sure.co.uk or call 0333 305 6692.

 

References: UK Election Policies and Their Impact on Your Finances

Democracy Club: UK general election candidate summary

BBC News: Poll Tracker

Unbiased: Policies to look out for before the general election

Labour: 10 policies to change Britain

Labour: Pension Policies

Labour: Plan for small businesses

Reform UK: Pensions & Social Care

Professional Pensions: Lib Dems Set out pensions commitments

BBC News: Green Party Pledge to boost NHS budget through tax rises

Manifestos

Conservative Manifesto 2024

Labour Manifesto 2024

Reform UK Manifesto 2024

Liberal Democrats Manifesto 2024

Green Party Manifesto 2024

Scottish National Party Manifesto 2024

Plaid Cymru Manifesto 2024

 

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