With the upcoming General Election, it may be time to think about your finances ahead of changes to current policies and legislation. As we get closer to the day, it is wise to read up on what a new government will mean for your savings and investments. With a hung parliament likely, some of the smaller parties may get chance to push through some of their policies which could come as a surprise to some.
Let’s take a look at some of the key areas which could be affected by the election...
Should the Conservative government remain in place after the upcoming election, David Cameron has promised to keep the “triple lock” system in place which means the state pension will rise by at least 2.5% every year until 2020. It was also announced in the budget that those of the age to take their pension would be able to cash in pension savings rather than buy an annuity.
Labour also want to keep the “triple lock” system however may cut pension benefits for wealthy pensioners. Annual allowance could be cut from £40,000 to £30,000 and the lifetime allowance from £1.25 million to £1 million. The rate of pensions tax relief could be cut from 45% to 20% for those earning over £150,000.
Auto enrollment may be extended to workers earning over £5773, and not restricted to those earning £10,000.
The Lib Dems would attempt to bring in new legislation to increase the annual state pension by £790 (and would also back “triple lock”). The Greens would introduce a “Citizens Pension” which would be set higher than the poverty line and assessed each year, amended to fall in line with inflation. Ukip are yet to announce a pension policy.
The Conservatives will extend the equity loan segment of the Help to Buy scheme until at least 2020. They also plan to offer 20% discounts to first time buyers under the age of 40.
Labour aim to double the number of first time buyers by 2025. They will also introduce a mansion tax and double council tax on properties that have not been lived in for over a year.
Lib Dems will increase house building to 300,000 a year and will include at least 10 new garden cities. The Greens would bring in a new “Right to rent” policy, whereby home owners could sell their home to the council and rent it back from them. They would also move to abolish the bedroom tax.
A tax free childcare allowance of £2000 has already been proposed by the conservatives, if re-elected, this should be implemented. The allowance applies per child under the age of 12. They may also seek an EU referendum which may mean the UK leaves the EU. In the event of this, the cap on bankers bonuses could be lifted.
The national minimum wage may rise to £8 an hour and the auto enrollment threshold may be reduced (see pensions)
Lib Dem (and Labour) could restrict salary sacrifice, which could impact employer’s bottom lines dramatically.
If you would like more information or advice about what a change in government could mean to your finances, please get in touch!