Interactive Investor

What the party manifestos will mean for your money

25th November 2019 12:39

Stephen Little from interactive investor


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The major political parties have unveiled their manifestos, but how will they affect your finances?

All of the major political parties have now unveiled their manifestos.

Labour and the Liberal Democrats have both come in for criticism for promises that could cost the UK tens of billions of pounds a year.

Meanwhile, the Conservative manifesto, which promises to “get Brexit done” has instead played it safe with spending commitments.

We take a look at how they will affect your personal finances.

Income tax

Boris Johnson has ditched planned income tax cuts of £8 billion for Britain’s highest earners. The Conservatives had previously pledged to move the point at which someone becomes a higher rate taxpayer from £50,000 to £80,000.

The Conservative Party has said it will not raise the rate of income tax, VAT or national insurance if it wins the election. From next year the party says it will increase the national insurance threshold to £9,500 next year from £8,424. This could mean a saving of around £100 a year for 31 million workers.

It says its “ultimate ambition” is to ensure that the first £12,500 people earn is completely tax free.

The Labour Party plans to increase tax for the highest earners while the majority will see no change.

It plans to tax people earning over £80,000 on 45% of earnings, while those earning above £125,000 will pay tax at a rate of 50%.

The party’s manifesto pledges a freeze on national insurance for everyone.

The Labour Party has also pledged to reverse inheritance tax cuts bought in under previous Conservative governments.

The Lib Dems have said they will add 1p to income tax to help fund the NHS and and social care.


The Labour Party has pledged to pay back £58 billion to women born in the 1950s hit by changes to the state pension age.

Individual payouts to women could be as high as £31,300. Nearly four million women have been affected by the government’s decision to raise the state pension age from 60 to 66.

Campaign groups such as BackTo60 and Women Against State Pension Inequality (Waspi) argue that many women born in the 1950s were not sufficiently warned of the changes and have suffered financial hardship as a result.

The Liberal Democrats have also pledged to compensate women born in the 1950s over state pension increases.

Labour has also promised to freeze the state pension age at 66 and not raise it in the future.

All three major political parties have pledged to keep the triple lock. This will guarantee that the new state pension increases by either 2.5%, average wage growth or inflation.

The Conservatives have also pledged to review the pension tax of low paid workers.

Those who earn between £10,000 and £12,500 - mainly women - have been missing out on pension tax relief depending how their employer has set up their pension scheme.

No mention was made about pension age changes was made, suggesting the current timetable to raise the state pension age will go ahead as planned.

Capital gains tax

The Labour manifesto has outlined plans to increase the amount of tax paid on capital gains (CGT) and dividend payments.

For workers currently earning more than £12,000, basic-rate income taxpayers pay lower CGT rates of 10% on gains from most assets and 18% on residential property, while higher-rate taxpayers pay 20% and 28% respectively.

As for dividends, currently investors receive a £2,000 dividend tax allowance before any tax is paid. Once that is used up, the rate of tax you pay depends on your income tax band.

Dividends are taxed at a lower rate than for earned income, with the basic rate of 7.5%, higher rate of 32.5%, and additional rate of 38.1% kicking in above the £150,000 income level.

Those separate dividend tax brackets will be abolished, with both dividends and capital gains instead taxed in line with the broader income tax brackets of 20%, 40%, 45% and 50%.

CGT will also likely see an increase under the Lib Dems, with the manifesto committing to ending the current separate CGT-free allowance and taxing capital gains and income through a single allowance.

Social care

With social care costs skyrocketing, there is a lot of pressure on each party to offer solutions. Labour’s is to create a National Care Service for England, intended to provide free personal care for older people.

At the same time, the party has committed to implement a care cap of £100,000 payable by individuals for so-called “catastrophic costs” and an unspecified lifetime cap on personal costs.

The Liberal Democrats have promised to invest and extra £35 billion in health and social care over the next five years.

The party says it plans to raise £7 billion for the NHS and social care funded through a 1p on income tax in England which will be ring-fenced.

Despite the current crisis in social care, the Conservative manifesto failed to provide any concrete proposals.

The party says it will provide £1 billion of extra funding a year for social care, as well as a commitment to seek cross-party consensus for long-term reform. It also promised to introduce a system which means no one will have to sell their home to fund long-term care, but details of this were vague.


Labour has proposed a radical shake-up of the housing system with plans to deliver a new social housing programme of more than one million homes a decade.

The party says it will build 100,000 council homes and 50,000 affordable social homes each year.

There will also be a levy on overseas companies buying housing, while giving local people ‘first dibs’ on new homes built in their area.

Runaway rents will capped with inflation, and cities will be given powers to cap rents further.

It has also pledged to bring in a new national levy on second homes used as holiday homes to help deal with the homelessness crisis.

The Conservative Party says it will bring forward a social housing white paper to “set out further measures to empower tenants and support the continued supply of social homes”.

It will also commit to renewing the Affordable Homes Programme, in order to support the delivery of hundreds of thousands of affordable homes.

The Liberal Democrats have pledged to build 300,000 new homes by 2024, including 100,000 social homes. The party also revealed measures for tackling empty properties, including powers for local authorities to increase council tax by up to 500% on second homes.


Labour has pledged to provide 30 hours of free childcare to all pre-school children within five years of coming to power.

It says it will also work to extend childcare provision for one-year-olds and that childcare provision accommodates the working patterns of all parents.

The Lib Dems have also promised to provide 35 hours of free childcare once babies turns nine-months-old.

Currently, childcare is free for all three to four-year-olds with both parents working for 15 hours a week for 38 weeks of the year.

The Conservative Party says it will establish a new £1 billion fund to help create more high quality, affordable childcare, including before and after school and during the school holidays.

This article was originally published in our sister magazine Moneywise, which ceased publication in August 2020.

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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