With the main political parties having set out their positions on a range of tax, pensions, and savings issues ahead of the general election on 4 July, AJ Bell summarises where they stand on key personal finance policies.
Rachel Vahey, head of public policy at AJ Bell, comments:
“With just over two weeks to go to the general election, we are now in the thick of campaigning. Over the last ten days most political parties have published their manifestos and promises to the nation.
“Their major long-term goals have been set out, but there are still some doubts across the board about whether the overall sums and anticipated level of revenue make sense. The two main political parties seem tied on a promise not to increase income tax, national insurance or VAT, with the Conservatives going one step further to promise a cut in national insurance contributions for employees and to abolish them for the self-employed.
“Tellingly, none promised to tackle the stealth tax of frozen thresholds, at least in the short to medium term. Except for pensioners, where the Conservatives promised their ‘triple-lock plus’ would also apply to the personal allowance for this group to keep them from paying tax on their state pension.
“There is widespread commitment to the triple-lock guarantee for state pensions, despite its rising and unpredictable cost. However, little has been said about social care – another key election issue for older generations.
“Finally, Labour promised a review of workplace pensions, certainly with one eye on achieving greater consolidation and, they hope, unleashing greater productive investment in the UK. Whereas the Conservatives gave us a pension tax guarantee not to introduce any new taxes on pensions and to keep the 25% limit on tax-free lump sums.
“However, with all parties scrabbling down the back of the sofa to raise funds to meet election promises, there is always the possibility of the next government exploring ways to tinker with pensions to generate extra money.”
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ISSUE |
CONSERVATIVE |
LABOUR |
LIB DEM |
OTHER |
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TAX |
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Headline tax policies |
No increase to income tax, VAT or corporation tax. |
No increases to income tax, NI, VAT, and corporation tax. |
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Green Party: new tax on the wealthy. Levied at 1% a year on the assets of people with more than £10m and 2% on those with more than £1bn.
Reform: Raise VAT threshold. Raise corporation tax threshold to £100k. Reduce main rate from 25% to 20%, then to 15% from year 5.
Plaid Cymru: Give Senedd powers to set income tax bands and thresholds. Support introducing a wealth tax.
SNP: Full devolution of taxes and NI under independence. |
|
Income tax thresholds |
New pensioner personal allowance increasing by triple-lock guarantee from April 2025. Saving: around £100 for 8 million pensioners, rising to £275 a year by the end of the Parliament |
No mention. |
When public finances allow, cut income tax by raising the tax-free personal allowance. |
Reform: Raise minimum income tax threshold from £12,570 to £20,000. And higher rate threshold from £50,000 to £70,000. When finances allow introduce 25% transferable marriage tax allowance meaning no tax on the first £25k of income for either spouse.
Plaid Cyrmu: Increase income tax personal allowance for pensioners in line with the triple-lock. |
|
National Insurance |
2p cut in employee NI to 6% from April 2027. Saving: £1,350 for average worker on £35k
Abolish main rate of NI for self-employed by end of the Parliament. |
No mention. |
No mention. |
Green Party: charge 8% on earnings above the UEL.
Plaid Cymru: Investigate increasing higher earners’ NI contributions.
SNP: Would ensure NI rates and thresholds fit with their ‘progressive’ tax rates. |
|
CGT |
CGT relief for landlords if sold property to existing tenants. |
Close loophole where performance-related pay in private equity industry is treated as capital gains. |
Reform to close ‘loopholes’ exploited by the super wealthy. Raise allowance to £5k, on top of a new tax-free allowance for inflation.
Introduce relief for small businesses.
Increase rates to 20/40/45 (more akin to income tax rates). |
Plaid Cyrmu: Equalise CFT with income tax. Revenue: £12bn-£15bn |
|
Tackle tax avoidance and evasion |
Tackling tax avoidance and evasion. Revenue: £6bn a year by the end of the Parliament |
Tackle tax avoidance by modernising HMRC – increase registration and reporting requirements, strengthen HMRC’s powers, invest in new technology and build capacity – and focus on large businesses. Close further non-dom tax loopholes. Revenue: £5.23bn |
Narrow the £36bn tax gap by investing an extra £1bn a year in HMRC to improve customer support and boost compliance and anti-avoidance activities. Revenue: £7,230bn |
Reform: Improve HMRC staffing and management to address failure to collect tens of billions of taxes.
Plaid Cymru: Crack down on tax evasion and avoidance.
SNP: Crack down on tax avoidance and evasion. |
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‘Big Banks’ |
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Reverse Conservatives’ tax cuts for big banks – restore Bank Surcharge and Bank Levy revenues to 2016 levels in real terms. Revenue: £4,250 |
Plaid Cymru: Re-introduce cap on bankers’ bonuses. |
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Windfall tax |
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Time-limited windfall tax on oil and gas giants (to fund publicly owned clean power company). Revenue: £1.2bn |
One off windfall tax on super profits of oil and gas producers and traders. Revenue: £2,120bn |
Plaid Cymru: Energy companies should be subject to an increased windfall tax and close loopholes allowing them to avoid this.
SNP: Windfall tax balanced with tackling cost of living crisis for NE Scotland. |
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Share buy back |
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4% tax on share buyback schemes of FTSE 100 listed companies to incentivise productive investment, job creation and economic growth. Revenue: £1,420bn |
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Stamp Duty |
Abolish stamp duty for first time buyers (up to value of £425k). |
Increase by 1% stamp duty on purchases of residential property by non-UK residents. Revenue: £40m |
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Reform: 0% on properties under £750,000; 2% on £750k - £1.5m; 4% over £1.5m. |
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Help to Buy |
First time buyers offered 20% government equity loan. |
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SNP: Reintroduce a simplified Help to Buy ISA scheme. |
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Inheritance tax |
No mention. |
No mention. |
No mention. |
Reform: IHT abolished for estates under £2m (98% of estates) and reduced to 20% for those above, with option to donate to charity instead. |
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Other |
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Reform: Scrap VAT on energy bills. Abolish IR35 rules. Tax relief of 20% on all private healthcare and insurance. |
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STATE PENSION |
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Triple-lock guarantee |
Protect the triple-lock guarantee.
New pensioner personal allowance also linked to triple lock guarantee. |
Protect the triple-lock guarantee. |
Protect the triple-lock guarantee. |
Plaid Cyrmu: Keep triple-lock. Increase income tax personal allowance for pensioners in line with the triple-lock.
SNP: Maintain triple-lock guarantee. |
|
WASPI |
Carefully considering the Ombudsman report and will work with Parliament to deliver an appropriate and swift response. |
No mention. |
Ensure women born in the 1950s are treated fairly and properly compensated. |
Plaid Cymru: Support compensation for ‘WASPI’ women.
SNP: Full compensation for ‘WASPI’ women. |
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Other |
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Invest in helplines to ensure quicker responses to queries and resolution of underpayments. |
SNP: Move towards ‘wellbeing state pension’. Oppose further increases in state pension age. Reverse changes preventing ‘mixed age’ couples applying for pension credit. |
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PRIVATE PENSIONS |
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Pension taxation |
Pension Tax Guarantee – will not introduce any new taxes on pensions.
Maintain 25% tax-free lump sum and tax relief at marginal rates.
Will not extend employer national insurance to pension contributions. |
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Green Party: introduce single rate of tax relief at basic rate tax (currently 20%)
Reform: Remove ‘lifetime cap’ on NHS pensions. |
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Pension investment – green |
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Require pension funds and managers to show their portfolio investments are consistent with the Paris Agreement. |
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Pension investment – UK plc |
No mention. |
Review of workplace pensions with emphasis on consolidation and scale to deliver better returns for UK savers and greater productive investment in UK. |
No mention. |
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Auto enrolment |
No mention. |
No mention. |
No mention. |
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Other |
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Will review the unfair surplus arrangements of the Mineworkers Pension Scheme, and transfer the Investment Reserve Fund back to members. |
Developing measures to end the gender pension gap in private pensions and ensure working age carers can save properly for retirement. |
Reform: Review pension system, referring to Australian example, to make it better and cheaper and available at a much younger age. Also establish a Royal Commission to tackle social care. Amend Mineworkers Pension Scheme so all scheme surpluses accrue to the members. Plaid Cymru: Transfer Mineworkers’ Pension Scheme Investment Reserve back to members and implement BEIS’s inquiry recommendations. |
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ISA |
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British ISA |
No mention of ISAs – including British ISA. |
No mention of ISAs – including British ISA. |
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Help to Buy ISA |
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SNP: Reintroduce a simplified Help to Buy ISA scheme. |
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CHILDCARE |
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Childcare |
30 hours of free childcare a week – 9 months to when start school (England only). |
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Rates |
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Review rates paid to providers for free hours to ensure they cover the actual costs of delivering high-quality childcare and early years education. |
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Maternity Benefits |
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Double statutory maternity and shared parental pay to £350 a week. |
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Parental Leave |
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In the longer term, ambition to give all families 6 weeks of use-it-or-lose-it leave for each parent paid at 90% of earnings; and 46 weeks of parental leave to share between themselves as they choose paid at double the current statutory rate. |
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Child Benefit / Higher Income Child Benefit Charge |
Families only lose child benefit when combined income reaches £120k. Saving: £1,500 average family |
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Introduce a Toddler Top Up – enhanced rate of Child Benefit for one-year olds. |
SNP: Scrap two child benefit cap. |
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School Fees |
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Apply VAT to private school fees. |
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Reform: Tax relief for private schools.
SNP: Would end VAT exemption for school fees. |
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OTHER |
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National financial inclusion |
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Require FCA and PRA to have regard to financial inclusion, such as protecting access to cash, supporting banking hubs, expanding access to bank accounts, delivering Sharia-compliance student finance and supporting vulnerable customers. |
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Offshore trusts |
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End use of offshore trusts to avoid inheritance tax so that everyone who lives in UK pays taxed in UK. |
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