Interactive Investor

How to broach personal finances after a Labour win

interactive investor’s Myron Jobson considers the impact on people’s finances in the immediate aftermath of Keir Starmer’s victory.

5th July 2024 07:15

by Myron Jobson from interactive investor

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Keir Starmer, Labour party leader Getty

Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “As the election result sinks in, people will consider the impact the newly elected government will have on their finances. There are bound to be changes affecting personal finances – although when these changes will occur remains to be seen.

“The first budget of the newly elected Labour government will prove crucial, as it sets out its stall for personal finances over the next five years, potentially rubber-stamping manifesto positions on taxes, benefits and allowances that will shape the economic landscape for individuals and families.

“This could involve reaffirming its position to maintain the state pension triple lock and dispelling speculation of changes to pension allowances and taxation, as well as keeping the freeze on income tax thresholds that means more of our income will end up in the taxman’s coffers over time (known as fiscal drag). Also, many first-time buyers will be waiting with bated breath to see whether the pledge to make permanent the mortgage guarantee scheme designed to ensure low-deposit mortgages will see the light of day, and, if so, how quickly it will be rolled out.

“Meanwhile, the fate of a number of policies, including the British ISA and ‘pot for life’ pension, remain up in the air – and there is always scope for changes that could be beneficial or detrimental to personal finances. Arguably the most significant news from the Labour manifesto involved what the party didn’t say – such as the treatment of capital gains tax.

“It is important to remember that manifesto promises aren’t set in stone. A manifesto offers a glimpse of a party’s vision for governing, but various factors, such as the size of a governing majority, economic shocks and geopolitical events, will determine whether the policies see the light of day.

“Regardless of what might or might not happen, making the most of tax-efficient ISA and SIPP wrappers, which shield any interest, dividends, or capital gains earned from income and capital gains tax, remains a good strategy. This means your investments can grow without being eroded by taxes.”

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