General Election: what does Labour’s landslide victory mean for your money?
We look at what Labour's General Election win means for your money.
Labour has won the General Election by an overwhelming majority, gaining around 34% of the vote across the UK.
But what does this mean for your money?
We’ll look at some of the most significant policies and what this means for your finances.
Taxes
There are no plans to increase income tax, national insurance, or VAT, but there could be tax rises elsewhere.
For example, the new government plans to introduce 20% VAT on private schools and end business rate relief for these schools, the costs of which could be passed onto parents. They have also made no commitment to not hike capital gains tax.
“The pledge not to increase national insurance, income tax or VAT led to feverish speculation of exactly what might be in new chancellor Rachel Reeves’ fiscal crosshairs, particularly if growth remains as elusive as it has been for the past two decades,” says Tom Selby, director of public policy at AJ Bell.
“And if there is a vacuum for speculation about potential revenue-raising tax measures, it is inevitable the prospect of a potential pension tax raid will rear its ugly head.
“It is vital savers and investors ignore the noise ahead of Reeves’ first major fiscal set-piece, likely in September or October, and focus instead on their long-term goals.”
The income tax threshold, frozen by the Conservatives and acting as a ‘stealth tax,’ will remain unchanged by the Labour government, meaning more people must pay tax.
According to government data, 4.4 million people have had to pay income tax since the threshold was frozen at £12,570 in the 2021/22 tax year.
Pensions
The new government plans to keep the triple lock so that the state pension will rise by the highest out of inflation, average earnings growth, or 2.5%.
This means retirees could get a state pension worth £13,250 annually by 2030.
There is a planned review of the pensions landscape to consider how to improve outcomes, boost investment in the UK, and use reform so workplace pensions can deliver better returns.
“While ensuring the investments held by auto-enrolment default funds are appropriate is clearly important, ultimately the biggest driver of retirement outcomes is contribution levels,” comments Selby.
“It is, therefore, likely the next government will need to think carefully about the question of pension adequacy and how to scale up minimum contribution rates beyond the current level of 8% of qualifying earnings.”
ISAs
The new government wants to simplify individual savings accounts (ISAs) to encourage more people to use Stocks and Shares ISAs.
As Labour wants to boost UK investment, the Conservative’s previous proposal for a British ISA, including an extra annual allowance of £5,000 to invest in UK companies, could still be a possibility.
Childcare
Before the Labour Party won the General Election, it said it would support the Conservative Party's previously announced expansion of free childcare to all children under five.
The new government also plans to expand childcare by repurposing unused school classrooms into nurseries to improve availability and provide free breakfast clubs.
Housing
The new government plans to build 1.5 million homes in five years and increase access to affordable housing.
It also intends to launch a new mortgage guarantee scheme to help people buy a property with a 5% deposit and wants to ban 'no-fault' evictions.
However, the new Labour government will allow the first-time buyer stamp duty exemption threshold to fall from the temporary limit of £425,000 to £300,000 from 1 April 2025.
Need financial advice?
Following Labour’s win, many personal finance issues will be highlighted, encouraging more people to examine their finances and plan for a brighter future.
If you’re looking for help with your finances, whether it’s your pension, mortgage, or investments, expert advice can help.
Unbiased can quickly connect you with a financial adviser, accountant or broker specialising in mortgages or insurance.
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