General Election 2024: What do the main parties have in store for your personal finances?

Find out what the Conservative and Labour Parties have planned for your taxes, savings and pensions.

With the UK General Election taking place later this week (Thursday 4 July), we examine how some of the main parties’ policies could affect your personal finances if they were to form the next Government.

Tax policies

For many, tax will be a key point for consideration when deciding which party to vote for. It can also be a divisive matter, with 27% people saying raising taxes would deter them from voting for a party, while a quarter would support tax hikes specifically to pay for the NHS (according to research conducted by Hargreaves Lansdown).

In their manifestos, the Conservative Party and Labour Party both pledge no increases to Income Tax, VAT and National Insurance. What’s more, the Conservative Party said they won’t increase Capital Gains Tax (CGT) and promise a 2p cut to employee National Insurance – reducing the rate to 6% by April 2027.

However, Sarah Coles, Head of Personal Finance at Hargreaves Lansdown, suggested “there’s a good chance you’ll pay more tax” no matter which party forms the next Government.

“Neither of the main parties have pledged to tackle frozen income tax thresholds, so regardless of who is elected, anyone who gets a pay rise is likely to face a bigger income tax bill,” Coles explained.

Meanwhile, the Liberal Democrats pledge to raise the tax-free personal allowance when public finances allow; similarly, Reform UK plans to increase the income tax starting threshold from £12,570 to £20,000.

As for the Green Party, they intend to introduce a 1% Wealth Tax on assets above £10 million, and a 2% tax on assets over £1 billion. They’ll also look to reform CGT, aligning the rates with that paid on income and taxable gains.

How will your savings be affected?

If income tax bands remain frozen under the next Government, and more people are dragged into a higher tax bracket as a result, savers may find they need to explore tax-wrappers for their hard-earned cash.

Currently, the Personal Savings Allowance lets basic-rate taxpayers earn up to £1,000 in interest on their savings per year before paying tax, while higher-rate taxpayers have a lower threshold of £500. However, neither the Conservatives nor Labour have defined any changes to the allowance or committed to keeping it in place.

Anyone concerned about being taxed on their savings could consider moving all or part of their funds into an Individual Savings Account (ISA) instead. You can deposit up to £20,000 across ISAs each tax-year, with any interest earned automatically exempt from tax.

Related Guides:

• What is the Personal Savings Allowance and how are my savings taxed?
• Cash ISA or savings account: Which should I choose?
• What is the 2024/25 ISA allowance?

Pension policies

The Conservative Party, Labour Party and the Liberal Democrats all promise to protect the triple lock on state pensions in their manifestos. Introduced by the Conservative Government of 2011, this measure means the state pension will rise by either the rate of inflation, average wage growth or 2.5% each year – whichever is highest.

Expanding on this commitment, the Conservative Party also pledges to increase the personal allowance for pensioners by the same amount so that the State Pension will always fall below the tax-free threshold, in what is termed the ‘Triple Lock Plus’.

Nigel Peaple, Director of Policy and Advocacy at the Pensions and Lifetime Savings Association (PLSA), said the proposal is “likely to be welcomed by pensioners”, but argued parties could be doing more to support younger people saving for retirement.

“It is also important that the main political parties commit to improving the workplace pensions of younger workers by increasing the value of automatic enrolment pension contributions, gradually, over the next decade, from 8% to 12% of salary, with most of the rises falling on the employer,” Peaple remarked.

Related Guide: The ultimate guide to pensions

Homebuying

When it comes to buying property, meanwhile, the Conservative Party plan to permanently abolish Stamp Duty up to £425,000 for first-time buyers. Furthermore, they pledge not to otherwise increase the rate or level of Stamp Duty in a bid to support homeowners.

As for the Labour Party, they hope to increase the rate of Stamp Duty paid by non-UK residents by one percentage point and use the revenue to fund other policies. Additionally, the party promises to support first-time buyers by introducing a permanent and comprehensive mortgage guarantee scheme.

Under the Liberal Democrats, overseas residents will find themselves subject to a Stamp Duty surcharge when buying a second home in the UK.

What action should you take?

With the General Election casting uncertainty over the future, it can be difficult to know how to manage your finances accordingly.

“As a general principle, elections should not be major factors in financial planning,” reminded Chris Bull, Chartered Financial Planner at Kellands, explaining that “plans ought to be built with decades in mind, rather than an electoral cycle”.

However, Bull recognised the “manifestos from the two major parties leave plenty of room for change at the next budget, which creates some uncertainty”.

“What is known at this moment are the various allowance available today. Utilising those now whilst they are in place is a pragmatic step all investors can take”.