General Election 2024: How It May Affect Your Finances

The UK General Election is happening today. This article looks at how the main parties’ policies could impact your personal finances if they come to power.

Tax Policies

Tax is a big issue for many voters. According to research by Hargreaves Lansdown, 27% of people would not vote for a party that raises taxes, while a quarter would support tax hikes to fund the NHS.

• Conservative Party: Promises no increases in Income Tax, VAT, and National Insurance. They also plan a 2p cut in employee National Insurance by 2027.
• Labour Party: Similar to Conservatives, no increases in Income Tax, VAT, and National Insurance.
• Liberal Democrats: Pledge to raise the tax-free personal allowance when finances allow.
• Reform UK: Plans to increase the income tax starting threshold to £20,000.
• Green Party: Proposes a Wealth Tax on high-value assets and reforming Capital Gains Tax.

Sarah Coles from Hargreaves Lansdown warns that without changes to income tax thresholds, you might end up paying more tax if you get a pay rise.

Savings

Frozen income tax bands could push more people into higher tax brackets, affecting savings.

• Current Personal Savings Allowance: Basic-rate taxpayers can earn up to £1,000 in interest tax-free; higher-rate taxpayers have a £500 threshold.
• No Party Commitment: No changes proposed by major parties to this allowance.

Consider putting money into an Individual Savings Account (ISA) to earn tax-free interest. You can save up to £20,000 per tax year in ISAs.

Pension Policies

• Conservative, Labour, Liberal Democrats: All promise to keep the triple lock on state pensions, ensuring it rises by inflation, wage growth, or 2.5%, whichever is highest.
• Conservatives: Also pledge a ‘Triple Lock Plus’ to keep state pensions below the tax-free threshold.

Nigel Peaple from the Pensions and Lifetime Savings Association suggests parties should also focus on improving workplace pensions for younger workers.

Homebuying

• Conservative Party: Plans to abolish Stamp Duty up to £425,000 for first-time buyers and not increase other Stamp Duty rates.
• Labour Party: Proposes a higher Stamp Duty rate for non-UK residents and a mortgage guarantee scheme for first-time buyers.
• Liberal Democrats: Suggest a Stamp Duty surcharge for overseas residents buying a second home in the UK.

What Should You Do?

Financial Planners advise that elections should not heavily influence financial planning. It’s best to focus on long-term strategies rather than short-term political changes. Utilize current allowances and tax benefits while they are available.

This election brings some uncertainty, but knowing the policies can help you make informed financial decisions.

Founded in 2017, Fintuity has fast become one of the only digital Independent Financial Advisers (IFA) in the United Kingdom.  Fintuity offers a wide range of financial advisory services including pensions, protection, investments and mortgage advice. The key difference is that as an exclusively digital service, we can offer significant savings and a service that is direct to you and on demand.