"With the prospect of paying more tax, remember to use your allowances"
Three ways the General Election could impact your finances
28 June, 2024
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. Jeannie Boyle, Chartered Financial Planner at EQ Investors, weighs in with her thoughts on pension changes, personal taxes and the potential for a shake-up of Inheritance Tax rules.
There seems to be a lot left unsaid in this election. Anyone looking at the state of the public services and public finances can see that the incoming government will need to raise revenue from somewhere.
As a Chartered Financial Planner, I advise my clients not to act on speculation, but carry on with the planning we have already put in place and do the things you were going to do anyway. Here are some of the things to look out for:
1. Pensions
In its manifesto, Labour reiterated its commitment to undertaking a full review of the pensions landscape. The review will consider what further steps are needed to improve pension outcomes and increase investment in the UK stock market.
The role of pensions in climate change efforts was also highlighted in the Labour manifesto. Labour will look to mandate UK-regulated financial institutions, to develop and implement credible transition plans that align with the 1.5°C goal of the Paris Agreement.
2. Personal taxes
Both major parties have conceded that there is limited scope for tax cuts and that they intend to stick with Income Tax threshold freezes – amounting to an effective tax rise. The Institute for Fiscal Studies has warned this would bring 4.5 million more people into higher income tax thresholds by 2028.
With the prospect of paying more Income Tax, consider using your tax-efficient allowances. ISAs offer a tax-efficient way to save and invest for the future. You can pay in up to £20,000 each tax year. If your investments grow, you won’t have to pay CGT. And you won’t pay UK Income Tax on any income either.
3. Inheritance Tax
Currently, pensions can be passed on free of Inheritance Tax on death. Various think-tanks have drawn attention to this rule previously and said it is an anomaly. It is possible that a newly-elected government might look to review the tax status of pensions on death.
