What the 2024 general election could mean for your finances

26 June 2024

2024 has been called “the year of elections” with an estimated 2 billion people around the world heading to the polls.

Voters in the UK will have their say on 4 July. Now that each of the main parties has published their manifestos, here’s what the 2024 general election could mean for your finances.

Conservatives – more National Insurance cuts and the “triple lock plus”

Having already reduced National Insurance (NI) rates twice in 2024, the Conservatives have made further cuts to NI one of their flagship policies at this election.

They propose to:

• Take another 2p off employee NI by April 2027, reducing the rate from 12% at the start of 2024 to 6%. They say this represents a total tax cut of £1,350 for the average worker on £35,000.
• Abolish the main rate of Class 4 NI contributions for self-employed workers by the end of the next parliament. Crucially, this will not affect any entitlement to the State Pension. The Conservatives say this measure means that 93% of self-employed people – 4 million of them – will no longer pay self-employed NI.

The party also says it will keep Income Tax thresholds frozen until 2028 and will not raise the rate of VAT or Capital Gains Tax (CGT). They have committed to maintaining Private Residence Relief so that your home is protected from CGT and introducing a two-year temporary CGT relief for landlords who sell to their existing tenants.

Despite rumours that the Conservatives may reform Inheritance Tax (IHT), there is no mention of IHT in their manifesto.

In 2010, the coalition government introduced the State Pension triple lock, which guarantees a rise in the State Pension each year. The Conservatives say that the triple lock has seen the basic State Pension rise by £3,700 since 2010.

To enhance this protection for pensioners, the “triple lock plus” will ensure the Personal Allowance for pensioners also rises by the highest of prices, earnings, or 2.5% each year. This guarantees that the new State Pension will always be below the threshold at which Income Tax becomes payable.

Additionally, a new Pensions Tax Guarantee will pledge:

• No new taxes on pensions
• To maintain tax relief on pension contributions at a saver’s marginal rate
• To not extend NI to employer pension contributions.

In the Spring Budget, chancellor Jeremy Hunt announced an increase in the amount you can earn before you start to lose Child Benefit. Previously, it was taken away entirely when one parent earned more than £60,000. This has already been increased to £80,000.

The Conservatives are also pledging to move to a “household” rather than an individual basis for Child Benefit, by setting the combined household income at which a family will start losing Child Benefit at £120,000.

They then plan to gradually remove it until household income reaches £160,000, above which families will no longer receive Child Benefit. They say this will have a positive impact on more than 700,000 households, each gaining an average of £1,480 a year.

The party has committed to delivering 1.6 million homes in England in the next parliament and has already announced changes to the non-dom rules.

Finally, the Conservatives say that they will go ahead with their proposal for an £86,000 cap on social care costs for people who are older or disabled in England. It means no one would pay more than that for personal care over their lifetime. The party plans to introduce this in October 2025.

Labour – No plans for tax rises, but changes to private school fees and non-dom rules

While they have made no commitments to reduce personal taxation, Labour says that, if they win on 4 July, they “will ensure taxes on working people are kept as low as possible”.

They have pledged not to increase NI, VAT, or the basic, higher, or additional rates of Income Tax.

Instead, the party plans to address what it calls “unfairness” in the tax system by:

• Abolishing non-dom status and replacing it with a modern scheme for people genuinely in the country for a short period.
• Ending the use of offshore trusts to avoid IHT.
• Ending private schools’ VAT exemption and business rate relief. They plan to use this additional tax revenue to train more teachers, citing an estimated shortage of 6,000.

Interestingly, Labour has also confirmed that, in a change from their previous stance, they have no plans to reintroduce the pension Lifetime Allowance (LTA).

The LTA capped the amount you could hold in your pensions without paying an additional tax charge when you accessed the funds. Chancellor Jeremy Hunt removed the additional LTA tax charge in April 2023, before abolishing the LTA altogether in April 2024.

Labour has decided not to reintroduce the charge to provide certainty for savers and because they say it would be too complex to bring back the former rules.

With regard to CGT and IHT, the Labour manifesto contains no plans to change the rules – although the party has ruled out applying CGT to primary residences.

When it comes to social care, the manifesto does not provide any detail on how much an individual should pay for personal care over their lifetime. However, Labour have confirmed they “will not disrupt” an existing plan to implement an £86,000 care cap from October 2025.

To help first-time buyers, Labour will also introduce a permanent, mortgage guarantee scheme, helping prospective homeowners who struggle to save for a large deposit. They say this measure would support 80,000 young people to get on the housing ladder over the next five years.

Finally, in a nod to the Truss administration’s “mini-Budget”, Labour says that they will take a strategic approach that gives certainty and allows long-term planning. They have committed to one major fiscal event a year, giving families and businesses due warning of tax and spending policies.

Liberal Democrats – raising the Personal Allowance and reforming Capital Gains Tax

While the two leading parties have published no plans for changes to the Personal Allowance, the Liberal Democrats have made increasing the allowance their priority, when the public finances allow.

They say this would benefit “the vast majority of families” and take more low-paid workers out of paying Income Tax altogether.

Making the tax system fairer is another key Liberal Democrat pledge, and they propose to do this by:

• Reversing tax cuts for the big banks, restoring Bank Surcharge and Bank Levy revenues to 2016 levels in real terms.
• Increasing the Digital Services Tax on social media firms and other tech giants from 2% to 6%.
• Introducing a 4% tax on the share buyback schemes of FTSE 100 listed companies, to incentivise productive investment, job creation, and economic growth.

The party also says it would “fairly reform” CGT to close loopholes exploited by the super-wealthy – although they have published no specific details of what changes they would make.

In addition, the Liberal Democrats plan to remove the two-child limit for Universal Credit and Child Tax Credit, as well as the benefit cap – the limit on the total amount of benefits one household can claim.

Reform UK – tax cuts for individuals and business

With Nigel Farage having called himself the real “leader of the opposition” in recent weeks, Reform UK has surged in the polls.

If they were to win power on 4 July, the party has pledged to:

• Increase the Income Tax Personal Allowance to £20,000. This would remove 7 million people from paying Income Tax and save every worker almost £1,500 a year.
• Increase the threshold for paying higher-rate Income Tax to £70,000.
• Reduce fuel duty by 20p a litre for both residential and business users.
• Scrap VAT on energy bills.

Reform UK also wants to increase the threshold at which IHT is paid, so it only affects estates worth more than £2 million. They also propose to significantly increase the Stamp Duty threshold when buying a residential property in England and Northern Ireland, from £250,000 to £750,000.

In addition to pledges concerning personal tax, the Reform UK “contract” also includes several policies to support British businesses:

• Lift the minimum Corporation Tax profit threshold to £100,000.
• Reduce the main Corporation Tax rate from 25% to 20%, then to 15% from year 3.
• Abolish IR35 rules.
• Lift the VAT threshold to £150,000.
• Abolish business rates for high street SMEs and offset this with an Online Delivery Tax at 4% for large, multinational enterprises.

Reform UK also wants to support marriage through the tax system by introducing a UK 25% transferable Marriage Tax Allowance when finances allow. This would mean no tax on the first £25,000 of income for either spouse.

Green Party – a new wealth tax and changes to National Insurance for higher earners

Unlike other leading parties who are seeking to levy no more taxes, the Green Party manifesto proposes to raise up to £151 billion a year in new taxes by 2029 – equal to around 4.5% of GDP.

One of the main components of this is a new tax on the wealthy, which would be levied at 1% a year on the assets of people with more than £10 million, and 2% on those with more than £1 billion. The party say this new tax would raise about £15 billion.

The Greens also propose to change NI rates and to charge the basic 8% rate on income above the Upper Earnings Limit (the rate is currently 2%). The party says that, if you earn £55,000, the additional amount you pay under their proposals would be less than £6 a week. If you earn £65,000, it would be about £17 a week.

Other manifesto promises include:

• A renewed pledge to scrap university tuition fees and bring back maintenance grants.
• Nationalising the railway, water, and big five energy companies.
• Making personal care free (support with daily tasks like washing, dressing and medication), similar to the system already operating in Scotland.

Finally, the Greens have also pledged to reform CGT to align the rates paid by taxpayers on income and taxable gains. They say this would affect less than 2% of all income taxpayers.

Other regional parties

Scottish National Party – seeking greater tax powers and fairer maternity pay

Under the terms of devolution, the Scottish parliament has the power to make changes to a range of taxes including setting the bands and rates of Scottish Income Tax.

In their manifesto, the Scottish National Party (SNP) say that they will demand the full devolution of tax powers to enable them to create a fairer system that protects public services and invests in the local economy.

For example, they are seeking the devolution of NI so they could ensure rates and thresholds fit the progressive Scottish Income Tax regime.

Like the Liberal Democrats, the SNP say they would also abolish the two-child limit for Universal Credit and Child Tax Credit.

Furthermore, the party wants to see maternity pay increase to 100% of average weekly earnings for the first 12 weeks of leave for new mothers. Thereafter it would be set at either 90%, or the statutory minimum allowance (currently £184 a week) for 40 weeks, whichever is lower.

Plaid Cymru – seeking a fairer settlement for Wales

Like the SNP, Plaid Cymru has also called for greater devolved powers. The party has backed devolution since the start and ultimately wants the country to run all its affairs, and to correct what it sees as “unfair” funding from Westminster.

The party wants to see a change in the welfare system, which is controlled at Westminster, with an increase in Child Benefit payments of £20 a week. They also want an extension of the energy “windfall tax” to help redress economic unfairness.

In line with the Green Party, they would also equalise CGT with Income Tax, raising between £12 billion and £15 billion.

Democratic Unionist Party  – a new funding model and protecting family incomes

As with other regional parties, the Democratic Unionist Party (DUP) says it will continue to lead the charge for a new “needs-based” funding model for the region to enable it to provide quality frontline services.

The DUP has also committed to “protect family incomes” and to continue to campaign with whichever party forms the next government to “fully restore Northern Ireland’s place within the UK […] including removing the application of EU law in our country and the internal Irish Sea border it creates”.

Sinn Féin – more devolved powers and constitutional change

While Stormont is responsible for a range of issues, which mainly cover everyday life within Northern Ireland, including agriculture, education, the economy, finance, health and infrastructure, it does not have the power to set its own Income Tax levels – and this is something Sinn Féin would like to change.

Constitutional change is also a key part of the manifesto, although the party has published no timescale for a border poll as the timing remains in the hands of the Westminster government.

Get in touch

If you have any questions about how the general election could affect your finances, please get in touch.

The content of this article is intended for general information purposes only. The content should not be relied upon in its entirety and shall not be deemed to be or constitute advice.