What the 2019 UK election means for your money


It’s been dubbed the Brexit election but the general election on 12 December 2019 is as much about tax, spending and competing visions for Britain’s economic future as anything else.

The main parties have all now released their manifestos and continue to outline their plans for the UK: ranging from Labour’s vision of a better socialist future, to the Liberal Democrats’ cornerstone policy of revoking Brexit, and the Conservatives mantra of Get Brexit Done and then reverse much of their own austerity measures.

Challenging the three main national parties for your vote – depending on where you live – are the Greens, Brexit Party, SNP, DUP, Plaid Cymru, independents and more. 

There will be many things that make Britons decide on how to cast their vote, but a key element for many will be plans for tax, spending and the national finances – and how they will affect them and others.

In our election manifesto round-ups we look at what the main parties' plans mean for your money and the nation's finances

In our election manifesto round-ups we look at what the main parties’ plans mean for your money and the nation’s finances

We look at the Conservative, Labour and Liberal Democrat manifestos in the articles linked below.   

We won’t tell you how you should vote, but we have three tips for deciding: 

  • Do your own research
  • Always question what you are told
  • Don’t just be tribal in your thinking – consider other people’s point of view    

Labour, Lib Dem and Tory plans and your money 

Labour 

The Labour manifesto includes radical tax overhauls, nationalisation of key utilities including water, energy and the railways, compensation for state pension age-hit Waspi women, free broadband for all and more new build homes. 

It would try to negotiate a new Brexit deal with the EU – most likely involving staying within a customs union or similar – but then put it to a second referendum vote where MPs could campaign to remain and Jeremy Corbyn would remain neutral.

Labour plans to spend an extra £82.9billion, but claims it can fund this with £82.9billion in extra tax income. A Funding Real Change document explains how this would work.

The plan to reimburse women caught out by the rising state pension age is not included in this and Jeremy Corbyn says this would be funded from government reserves and extra borrowing.

New income tax bands would come in, with people paying 45 per cent above £80,000 and 50 per cent above £125,000. 

The removal of the personal allowance would therefore mean an effective 67 per cent income tax rate under Labour between £100,000 and £125,000. 

Corporation tax would rise from its current 19 per cent back up to 26 per cent and stock market listed companies would have to hand over 10 per cent of their shares to an employee ownership fund. Dividends from this up to £500 would go to workers, the rest to the state. 

Other measures include shoring up workers’ rights, a rent cap and more childcare. 

We run the rule over what Jeremy Corbyn is offering voters and what it would potentially mean for your personal finances.

> What would a Labour government mean for your money? 

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Labour’s personal tax plans 

Income tax

Labour has proposed sweeping changes aimed at squeezing more money out of higher earners.

It will create a new £80,000 threshold at which the 45 per cent income tax rate kicks in, and introduce a ‘super-rich’ rate of 50 per cent for those earning £125,000-plus. 

It says only the top 5 per cent of earners would pay more tax, albeit that doesn’t necessarily equate to the same proportion of the nation’s wealthiest people. 

Other taxes

Capital gains tax will be brought into line with income tax rates, spelling big tax hikes for those who sell shares, funds, buy-to-lets or second homes.

Capital gains tax rates will shift from 10 per cent and 20 per cent for shares, funds and other assets, and 18 per cent 28 per cent for property, to 20 per cent, 40 per cent, 45 per cent or 50 per cent.  The annual exempt CGT allowance of £12,000 would be removed with a nominal £1,000 one brought in but gains only charged above the return made over the same time from interest on government bonds.

Dividend tax would be brought into line with income tax rates too, and the £2,000 annual dividend allowance axed. 

These moves would affect small investors and may fall particularly hard on pensioners who have built up share and fund investments to support retirement – and small company bosses and directors.

Marriage tax break  

Labour will scrap a tax break which can save £250 for married couples earning less than £50,000, albeit this is not widely used.

Inheritance tax 

Labour would scrap the Tories’ extra inheritance tax uplift, known as the ‘main residence nil-rate band’, which from next April will add up to £350,000 of tax-free allowance (£175,000 each) for married couples leaving homes worth that much to direct descendants. 

Labour would restore the main inheritance tax threshold to £325,000 for everyone, taking the potential IHT-free limit for a married home-owning couple down from just shy of £1million now to £650,000.

University tuition fees

Labour would scrap university tuition fees, which currently cost as much as £9,250 per year. 

Lib Dems 

The cornerstone of the Liberal Democrat campaign is to revoke Brexit if they were elected as a majority party. 

Elsewhere, the Lib Dem manifesto includes a skills wallet, council tax hike on second homes, a cap on social care costs, keeping the state pension triple lock and more hours of childcare. 

They would tax capital gains as income and add 1p in the pound to basic rate income tax to help fund social care and the NHS, delivering 21p, 41p and 46p rates. 

Councils would be able to impose big council tax hikes on second homes and a rent to own scheme allowing tenants to gradually buy their homes would be introduced.

The Lib Dems would raise corporation tax from 19 per cent to 20 per cent.

The party would keep the popular state pension triple lock, which guarantees rises of at least 2.5 per cent a year for the elderly.

But while the Lib Dems have expressed sympathy with the Waspi women affected by the state pension age increase from 60 to 65, it hasn’t made them the kind of big compensation offer Labour is touting.  

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We run the rule over what Jo Swinson is offering voters and what it would potentially mean for your personal finances.

> What would a Lib Dem government mean for your money? 

Lib Dem personal tax plans 

Income tax

A £7billion a year fund created by putting an extra 1p on income tax (outside Scotland) would be spent on relieving the social care crisis, and on the health service more generally. That would see rates rise to 21p, 41p and 46p.

In the longer term, the Lib Dems would look to introduce a ‘health and care tax’, offset by other tax cuts, following a wide public consultation

Capital gains tax

The Lib Dems would abolish the separate capital gains tax-free allowance of £12,000, and tax gains at income tax rates.

Currently, capital gains tax rates are 10 per cent and 20 per cent for shares, funds and other assets – or 18 per cent and 28 per cent on residential property. 

As with Labour, these moves would affect small investors, pensioners selling share and fund investments to support retirement income – and small company bosses and directors cashing in on building a business.

Second homes

Local authorities would be able to increase council tax by up to 500 per cent where homes are being bought as second homes plus a stamp duty surcharge if you are buying as an overseas resident.

£10,000 skills wallet 

This would see £10,000 given to every adult, spread across three instalments: £4,000 at 25; £3,000 at 40; and £3,000 at 55.

Individuals, employers and councils could top up the wallets to be spent on education and training throughout adulthood.

A range of training course providers would be monitored by the Office for Students and the higher education regulator, and certified by the Government.

The policy is estimated to cost £1.62billion, and would be funded by an increase in corporation tax to 20 per cent and capital gains tax hikes. 

Conservatives  

The Conservative manifesto was thinner than others and contained less promises: the main one in case you haven’t noticed is to ‘Get Brexit Done’.

The Tories would seek to get Boris Johnson’s Brexit deal through in time to leave the EU on 31 January 2020.  

They have also committed not to extend the implementation period beyond December 2020, a move that has drawn some criticism due to the disadvantage the Article 50 time limit has already put on the UK in negotiations.

The Tories say: ‘We will keep the UK out of the single market, out of any form of customs union, and end the role of the European Court of Justice.’ 

What is in the manifesto includes, a rise in the National Insurance threshold, a social care promise, new superbus networks, more help for tenants and a crackdown on abusive employers. 

The Conservatives have promised to spend big on the NHS, schools and infrastructure, a so-called ‘transport revolution’, and target improving the environment. 

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The Tories issued a triple pledge on tax: they will not raise income tax, National Insurance or VAT in the next parliament.

But they would raise the NI threshold, cutting tax bills as it is shifted up towards the personal allowance. At first the effect would only be about £100 a year, rising towards £500 as it approaches the personal allowance threshold at £12,500.

The Conservatives will forge ahead with a digital services tax, which will slap a 2 per cent levy on the revenues of large search engines, social media platforms and online marketplaces derived from UK users (above the first £25million) from next April.

Those hoping for a cut to stamp duty have been disappointed, although this could potentially be deliberately left out so as not to be seen to be benefiting the wealthy and then brought in at a Budget.

Boris Johnson does appear to have found a magic doctor tree though, with a promise of 5,000 more GPs and 50,000 extra nurse, although 18,500 of those will be existing ones persuaded not to quit.

We run the rule over what Boris Johnson is offering voters and what it would potentially mean for your personal finances.

> What would a Conservative government mean for your money?

Conservative personal tax plans 

Income tax and National Insurance

The Conservatives promises a tax cut for 31million workers, by raising the National Insurance threshold from £8,632 now to £9,500 next year. That’s worth about £104 to someone on £25,000 a year.

The personal allowance for income tax is already £12,500, and the manifesto declares: ‘Our ultimate ambition is to ensure that the first £12,500 you earn is completely free of tax – which would put almost £500 per year in people’s pockets.’

Pensions

The Conservatives say they will keep the triple lock – which guarantees state pension rises of at least 2.5 per cent – the winter fuel payment, the older person’s bus pass and other pensioner benefits.

They also promise a comprehensive review of how to fix a tax anomaly which sees workers, mostly women, earning between £10,000 and £12,500 lose pension top-ups automatically paid to the better off.

The party has just come out with a one-year fix for the so-called ‘taper problem’, which sees doctors turn down shifts for fear of massive pension tax bills. This is an issue triggered by the Tories’ own pension tax relief taper – there is huge pressure to  axe this entirely. 

Social care

At the heart of the Tories’ offer is a ‘guarantee’ that no one needing care will have to sell their home to pay for it. It aims to make an urgent attempt to build a cross-party consensus on funding social care. 

 

 

 

 

 

 

 

 

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