The outcome of the General Election will impact all of our lives, especially our personal finances. The main political parties – the Conservatives, Labour and the Liberal Democrats – have different policies for several key issues, including tax and pensions, and people will be keen to know what voting for each party could mean for their money. Tax, young people and pensions are three significant areas of debate.
Tax has been a controversial point in the lead up to the election. The Conservatives’ so-called ‘dementia tax’, as it has been dubbed by critics, pledged to raise the means-tested floor at which older people will be required to part-fund any social care they receive to £100,000. However, Theresa May has been accused of a partial U-turn on this policy after announcing a cap on the number of people who would need to pay for their care. It will be interesting to see how this move plays out with voters, especially among the older generations likely to be affected by it.
The Conservatives are looking to lower tax and simplify the tax system. They are still committed to raising the tax-free personal allowance to £12,500 by 2020 for income tax, as well as raising the threshold for the 40p tax rate to £50,000. The Labour Party, meanwhile, is hoping to raise an extra £6.4 billion a year from the top 5% of the UK’s earners by setting the threshold for the 45p rate of income tax at £80,000 instead of £150,000, along with the introduction of a new 50p rate for earnings over £123,000. The Liberal Democrats, meanwhile, are looking to add an extra 1p to income tax.
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Another area that is providing much debate across parties is engaging young people. The Liberal Democrats are promising young people bus passes and help getting a foot on the housing ladder. Young people may also be drawn to Labour’s pledge to abolish university tuition fees and ban zero-hour contracts. The Conservatives will look to increase the so-called national living wage to 60% of median earnings by 2020, and thereafter by the rate of median earnings.
Pensions are also a major point of contention, especially regarding the ‘triple-lock’ pension system. This system has proven popular because it guarantees a minimum increase in the state pension each year by a minimum of whatever is the largest of the following – the rate of inflation, average earnings growth, or 2.5%. Labour have committed to keeping the system, but the Conservatives would look to replace it after 2020 with a new ‘double-lock’, which rises with earnings and inflation. Again, it will be interesting to see what, if any, impact this has in the minds of voters.”