What your general election vote could mean for your finances: SIMON LAMBERT

By Liam On Jul 4, 2024

By Simon Lambert for Thisismoney.co.uk

Updated: 05:28 EDT, July 4, 2024

After much heaving and groaning, Britain is dragging its feet today over the election results.

No party has proven particularly inspiring. Campaigns have often focused on what parties won’t do rather than what they will do – and there is a strong sense that what comes next depends as much on what politicians won’t say as what they do say.

It was painful to watch, but we survived and the next round of our lives in Britain beckons.

It’s a bit like watching England’s thrilling match last Sunday, but without the brilliance and intensity of Jude Bellingham’s goal.

The candidates: They want your vote, but what do they promise you financially?

This is Money has long taken a politically neutral stance. Our job is to tell you what’s happening in the world and explain what it means for your finances.

Of course, you cannot ignore politics, but we believe that it is also our duty to hold politicians and governments, regardless of their colour, accountable.

It’s also important to consider ideas across the spectrum: good ideas can often come from unexpected places.

It is especially important to do this when there are elections.

This is our chance to have a say in how we shape the economy and our finances over the next five years.

So before you vote today – if you haven’t already – read our analysis of the manifestos and listen back to our special manifesto podcast.

> What the Labour manifesto means for your finances

> What the Tory manifesto means for your finances

> What the Lib Dem manifesto means for your finances

> This is Money podcast – election manifesto special

The This is Money team investigated what the major parties are promising for our finances, and what they chose not to say.

We also looked at the manifestos of GroenLinks and Hervorming to see if they contained any good ideas.

As Election Day approaches, we asked investment experts what the election outcome could mean for investors.

My overall assessment of the election campaign is that it has been disappointing.

Neither the Conservatives nor Labour – the two parties with a realistic chance of coming to power – have been entirely honest with us, nor have they presented a creative vision of how to get Britain back on its feet.

Neither side has been entirely honest or presented a creative vision of how to get Britain back on its feet.

Even when a party comes up with a proposal to do something, hardly any details are given.

Labour’s planning reform and push for build has little depth to how to prevent it from becoming a charter for big housebuilders to run wild, selling low quality new homes at high prices and building them in rural areas.

Expensive promises have been made, along with promises to cut taxes we can’t afford to cut – the Tories with NI – or claims they won’t raise certain tax rates – as Labour has done – while secretly planning to make us pay more tax.

Meanwhile, no party has promised to fix the counterproductive mess our tax system is in. Moreover, there is fear that some form of tax theft on wealth, in the form of capital gains, pensions, inheritances or something else, is on the way to close the gap.

The Institute for Fiscal Studies has been very direct about tax and spending, calling it a “conspiracy of silence.” They say that in the next parliamentary term we either have to raise taxes or cut government spending. They also say that the programs are flawed.

There is, however, another way to make progress: grow the economy in a much better way.

This leads to my biggest disappointment about the election: a lack of inspiration and the message that a government can lay the foundation for growth, but that it is up to individuals and companies to take advantage of this and realize it.

Whatever the election outcome – and barring a real shock, I think we can all guess – This is Money is here to help you understand what it means for your finances.

Tomorrow, over the weekend, and in the coming weeks and months, we’ll explain what you need to do and how you can protect and grow your wealth.

What the Tories and Labour say about taxes and the economy

Conservatives

The Conservative Party likes to portray itself as the party of lower taxes, but its performance in recent years undermines that.

National insurance has been reduced, but frozen tax thresholds mean people pay more tax and move into higher tax brackets.

The Conservatives say they will continue to cut NI, taking a further 2p off the rate and abolishing the self-employed rate altogether.

The triple lock plus means that people no longer have to pay tax on state pensions, because they rise with inflation, income or at least 2.5 percent. Also, no new taxes are levied on pensions.

For first-time home buyers, the stamp duty threshold will be permanently raised to £425,000 under the Tories (a level that is now temporary) and the child benefit threshold will be abolished and calculated on household income and increased to £120,000.

The Conservatives have no intention of addressing the tax traps in the system, such as the 60 per cent rate created by the abolition of the personal exemption, nor of undoing some of their own tax frauds.

Jeremy Hunt has reduced the capital gains exemption from £12,300 to £3,000 and the dividend exemption from £2,000 to £500. He has also frozen ISA and personal savings exemption limits.

Tax cuts will be funded by tackling tax avoidance and cutting social security contributions, the Conservatives say, and they will stick to Hunt’s policy of reducing the national debt in the fifth year of the forecasts.

The IFS said the Tories’ cost cuts were too ambitious and that, given the promised increase in defence spending, it would be very difficult to balance the budget without cutting core spending.

Work

There are many questions for Labour over the economy and tax, but the party seems reluctant to provide the answers before people go to the polls.

The Labour Party has pledged not to increase income tax, national insurance or VAT rates, but will stick to frozen thresholds that increase people’s tax bills.

There are concerns that now that Labour has made this promise, it will have to raise other taxes to raise revenue, such as capital gains tax, inheritance tax, council tax or cutting pension tax breaks.

It will cap corporation tax at 25 percent, reform business rates and impose 20 percent VAT on private school fees. It will maintain the triple lock on the state pension.

The Labour Party says it wants to prioritise creating wealth and economic growth. It plans a housing boom and reform of planning rules, including building in the Green Belt.

It says: ‘Our fiscal rules are non-negotiable and will apply to every decision taken by a Labour government. This means balancing the current budget so that day-to-day costs are covered by revenue and reducing debt as a share of the economy in the fifth year of the forecast.’

The five-year budget rule is the same as Jeremy Hunt’s and the IFS has indicated that this is virtually impossible to achieve without tax increases or spending cuts.

Election money

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