What the Labour landslide means for your pension, taxes and more

Following the Labour party’s landslide victory over the Conservatives - complete with a 170-seat majority (only just shy of the 179 seats swept up by Tony Blair’s government in 1997) - Labour should have sufficient voting power to bring in new policies which could impact your everyday finances. But what can we expect and what does it mean for you?

The Labour Party have promised not to raise personal taxes over the course of this Parliament, so where will they look to raise revenue instead? Jason Hollands, Managing Director of Bestinvest, says:

“The scale of Labour’s parliamentary majority and weakness of the opposition will continue to fuel concerns that at some point in the next Parliament, Labour might feel emboldened to raise taxes further than the plans set out in its manifesto. Having pledged not to increase Income Tax, VAT, National Insurance or the main rate of corporation tax, areas like Capital Gains Tax, Inheritance Tax and pensions tax reliefs could be vulnerable if the new administration decides it wants to increase tax revenues further.”

In this article, we dive into three key areas of fiscal policy that Labour may tinker with in the coming years – pensions, tax and investments – and how any changes may affect you. Plus, we spoke to our expert Contributors, Adrian Kidd and Jason Moss, for their exclusive thoughts.

Pensions

Pensions are always a big policy issue in the run-up to General Elections. However, the Labour manifesto was noticeably vague on the details of its plan to review the pensions landscape - although they have pledged to “improve pension outcomes and increase investment in UK markets”. 

State Pension

Labour has promised to uphold the “triple lock” promise, whereby the State Pension increases each year in line with the highest of average earnings growth, inflation or 2.5%. 

The full new State Pension for the 2024-25 tax year is £11,502.40. Following current forecasts, it will rise to almost £12,000 next year – edging it closer to the threshold where the tax-free Personal Allowance cuts off and Income Tax becomes payable (from £12,570).

However, Labour stopped short of committing to the Conservative party’s pledge of a “triple lock plus” - which would shield the State Pension from Income Tax. So although pensioners will continue to receive increases to their pension income, they may also face more tax as these rises compete against frozen thresholds.

Pension tax relief