What impact will the general election result have on your finances?

What impact will the general election result have on your finances?

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Theresa May and moneyGETTY – STOCK IMAGE

The outcome of the general election will determine the course of the entire UK economy

This is likely to concentrate minds as voters head into the polling booths on .

The outcome will determine the course of , the war on terror, immigration and the entire UK economy.

It will also have a major impact on your own personal finances.

So which way should your pocket vote?

Here’s what the parties have lined up for you.


Around 24 million basic-rate taxpayers are set to be £33 a year better off, with higher-rate taxpayers gaining £208 in total

Tom Selby – Senior analyst at wealth advisers AJ Bell


Income tax

The are traditionally the low tax party, and if they win are likely to continue to ease the income tax burden.

This means raising the personal allowance to £12,500 by 2020, up from £11,500 today, and increasing the higher rate tax threshold to £50,000 at the same time.

Tom Selby, senior analyst at wealth advisers AJ Bell, says this will allow most workers to keep more of their earnings: “Around 24 million basic-rate taxpayers are set to be £33 a year better off, with higher-rate taxpayers gaining £208 in total.”

However, those on incomes below £11,500 a year will see no gain, as they do not pay tax at all.

has said it will not increase income tax for anybody earning less than £80,000 a year, but higher earners will have to brace themselves for a tax assault, with earnings above that level set to be taxed at 45 per cent, and incomes above £123,000 facing a punitive 50 per cent blitz.

Selby says Corbyn is unashamedly standing on a “tax and spend” manifesto: “Higher earners will face the biggest burden in funding Labour’s ambitious spending plans.”

People looking at their financesGETTY – STOCK IMAGE

The election will also have a major impact on your own personal finances

Triple lock

Labour’s giveaway manifesto has also pledged to maintain the current “triple lock” on state pensions, which increases the payout by either earnings, inflation or 2.5 per cent, whichever is highest.

By contrast, the Conservatives have talked of downgrading this to a “double lock”, removing the 2.5 per cent minimum annual rise and spending some of the savings on social care instead.

Although the double lock is less generous, Selby says it is wrong to portray this as an attack on pensioners: “If inflation or earnings are above 2.5 per cent, the two policies will cost exactly the same.”

Tom McPhail, head of policy at financial advisers Hargreaves Lansdown, says scrapping the triple lock may be the right thing to do: “Many independent observers have argued that the triple lock has done its job and should now be abandoned.”

State pension age

The state retirement age is set to climb steadily as life expectancy grows, hitting age 66 for both men and women by 2020.

It will increase again from 66 to 67 between 2026 and 2028, and continue to climb thereafter.

The Labour manifesto pledged there would be no rise in the state pension age beyond 66, but McPhail warns that there will be a price to pay as life expectancy continues to rise: “It will either cost billions to deliver or mean cutting everyone’s state pension by around £800 a year.”

Labour also wants to take account of variations in life expectancy in the state pension system, which could see some workers able to claim their state pension earlier, but this system would be incredibly complex and expensive to administer.

Wallet with moneyGETTY – STOCK IMAGE

The Conservatives say they will means-test the winter fuel allowance

Winter fuel

The Conservatives say they will means-test the winter fuel allowance, which currently gives pensioners between £100 and £300 a year to help pay for heating bills.

The savings will be transferred directly to health and social care.

However, this will only affect the well off, with the vast majority continuing to receive this allowance.

Labour says it will continue to pay the allowance to everybody, regardless of income.

McPhail says: “We now live in a topsy-turvy political world, where Labour proposes to preserve the winter fuel allowance for even the wealthiest pensioners.”

Social care

’s so-called “dementia tax” would have forced people to pay for their own care until their combined savings and property fell below £100,000, ravaging the wealth of many families.

This threshold is actually higher than today’s, as those with capital and savings above £23,250 in England have to fund all their own social care.

However, it prompted a Tory collapse in the polls.

May has since backtracked by saying she will cap the amount any individual will have to pay, although we do not know what it will be as yet.

Labour has also said it will raise the current cap, although it has not said to what level.

Theresa MayGETTY

Theresa May has backtracked on “dementia tax” – saying she will cap the amount individuals will pay

It will also provide free end-of-life care.

Aegon pensions director Steven Cameron says a new approach to social care funding is long overdue, but a cap is required: “Previous proposals to cap total contributions at £72,000 would have offered far greater protection. Otherwise some face paying hundreds of thousands if they need care for lengthy periods.”

and his shadow chancellor John McDonnell are clearly happy to use taxpayers’ money to buy votes, but the respected Institute for Fiscal Studies has warned their plans are impossible to cost.

Regardless of who wins, if politicians make promises they cannot afford, then everyone will be the poorer.

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