"Personal tax promises always creates Election headlines and this time is no different"

With the 2024 General Election fast approaching, we reached out to a handful of financial advisers to get their take on what it means for your money. Tanya Laing, Chartered Financial Planner at St James's Place, weighs in with her thoughts on tax tweaks, the triple lock and what the Election could mean for investors.

In just a couple of weeks' time, we will know who will govern us for the next 5 years.

There are many considerations that go into our vote on the 4th of July. How proposed changes will affect our finances is a big one. So before heading down to the polling station, it's important to understand what each party is promising.

Both the Labour and the Conservatory manifestos list dozens of changes they both promise to make, but the big three that will likely have a significant impact on my clients are personal taxation, pensions and investing.

So what will be better for your bottom line – a Sunak or a Starmer victory?

1. Taxation

Personal tax promises always creates Election headlines and this time is no different.

Labour have ruled out hikes in Income Tax, National Insurance (NI), and VAT (although they did pledge to charge VAT on private school fees) and to demolish non-dom status. No mention of Capital Gains Tax (CGT) in their manifesto, so a hike here would not be out of the question.

The Conservatives have pledged not to raise Income Tax, CGT or VAT and aim to cut NI by 2 percentage points to 6%. They also want to abolish Class 4 NI for the self-employed, with a long-term goal of ending NI altogether.

Major reform to the Inheritance Tax (IHT) landscape was absent in both the Labour and the Conservative manifestos, so don’t expect this tax to be abolished.

Both Labour and the Tories have reiterated they plan to keep standard allowances frozen until 2028, which effectively represents a gradual tax hike given goods and services and wage inflation.

So when it comes to tax-cutting, the Tories’ promises are bolder. Labour on the other hand are being more cautious, presumably down to their commanding lead in the polls.

2. Pensions

Both the Conservatives and Labour support the pensions triple lock. This means the State Pension will rise by the highest of average earnings growth, inflation, or 2.5%.

The Conservatives have gone further with a "triple lock plus" that will also ensure that from next year, the tax-free personal allowance for pensioners also rises by the highest of prices, earnings or 2.5%

The Lifetime Allowance (the total amount you can save in your pension fund without being taxed) does not appear to be making a return, after Labour backtracked on their promise to bring it back if they got in.

Although not openly discussed, both parties might consider raising the State Pension age sooner to save money. The current age is 66, with plans to raise it to 67 by 2028 and 68 by 2046.

So lots of alignment here in the pensions world and if the manifestos are to be believed, not much change on the short-term horizon. This is good news for people planning their retirement.

3. Investing

Interestingly the Conservative manifesto makes no mention of the new British ISA, which Chancellor Jeremy Hunt announced recently. Labour on the other hand have expressed support for it. This ISA would offer a separate £5,000 allowance - on top of the existing £20,000 annual ISA limit - to encourage investors to back British companies.

Both parties have indicated that changes to the ISA landscape could be on the horizon, aiming to make it easier to track and manage your savings and investments. So again, both parties seem to be similarly aligned here.

A number of my clients ask if there is anything they should be doing with their money before an election. I would never recommend making any financial changes based on what a future government may or may not do. But you may however bring some changes forward as long as they still meet your financial objectives. Topping up ISAs and pensions if you are in a position to is always good advice. Stick with your long-term plan and hope the next Government does the same!

Tanya Laing

Chartered Financial Planner, St James's Place

I'm a champion of increasing financial confidence in women. Prior to becoming a financial adviser, I spent over 25 years as a currency trader, so I am well-versed in investments and the male-dominated investment world.

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