Theresa May’s announcement to hold a snap general election this year came as quite a surprise to many, forcing each of the political parties to gather their plans and present their manifestos to the public.
One key question on the tip of everyone’s tongue is how the election could affect their personal finances. Research suggests that the current state of the UK’s personal finance isn’t the greatest, with predictions suggesting a 5 year squeeze on personal finances for many.
Is this the best route to secure the country’s finances and return personal finances back to a more stable state, or have other parties made more appealing pledges that might pique your interest?
Here we look at each of the major parties’ pledges when it comes to personal finances, to give you a better understanding of how the general election could affect your money.
Should they stay in power, the Conservatives have made a pledge to raise the personal allowance threshold from £11,500 to £12,500 by 2020. This increase in tax-free earnings would provide the average taxpayer with around £33 extra each year, in the current economy. They are also hoping to raise the higher tax threshold from £45,000 to £50,000, as well as improve the current Living Wage, by 2020.
They are also considering making changes to the current triple-lock state pension, in order to put money towards social care requirements.
At the moment, the triple-lock state pension provides a guaranteed minimum increase in state pension every year, however considerations of introducing a double-lock state pension, which would cease the minimum increase in order to support the required costs of social care.
These were the original intentions for the Conservatives for their term, before they announced the snap election. Should they remain in power, they have promised to stick to their original aims and intentions.
Labour’s manifesto leans further towards a ‘tax avoidance when possible’ campaign as opposed to the ‘low-tax promise’ from the Conservatives. Labour have pledged to keep income tax the same, or without any increases for lower earners within the UK.
If you earn below £80,000 per year, Labour have suggested that you will not see an increase in income tax if they win the election. As for higher earners, Labour have suggested an income tax of 45% for any earnings over £80,000, as well as an additional 50% tax on anything earned over £123,000.
Current tax bands under Conservative parliament
Potential tax bands under Labour parliament
% of tax on earnings
|Personal allowance||Basic rate||Higher rate||Additional rate||Personal allowance||Basic rate||Higher rate||Additional rate||Added rate|
|0% up to £11,500 (£12,500 in 2020)||20% between £11,501 and £45,000||40% between £45,001 and £150,000||45% over £150,000||0% £11,500 (£12,500 in 2020)||20% between £11,501 and £45,000||40% between £45,001 and £80,000||45% between £80,001 and £123,000||50% over £123,001|
VAT and National Insurance Contributions are set to remain steady with a Labour win, there are aims to increase the Living Wage to £10p/h by 2020, too.
If you have an interest in the help-to-buy scheme, Labour have plans to keep it in place until 2027 at the very least.
Labour looks to keep the current triple-lock state pension in place, as well as restricting the retirement and pension age from increasing above 66 years of age.
The Liberal Democrats have presented a similar pledge to that of Labour when it comes to state pensions and the existing triple-lock system. They have guaranteed that this minimum increase year on year will remain throughout the next parliament, should they win the election.
They have suggested adding an additional 1p to each of the income tax rates, in order to create an additional £6billion that can go towards the NHS and social care.
When it comes to the Living Wage, rather than stating specific numbers that they intend to reach by a certain milestone, the Liberal Democrats have suggested an independent review of the Living Wage, should they come into power.
It all comes down to your personal opinion and choice
With personal finances being the topic of much discussion around the country, it seems that each of the main political parties are addressing the subject within their manifestos and pledges, offering at least some guidance for those unsure of who to vote for.
Pensions have been a particularly hot topic, as has the fear of the unknown that’s sprouted from the Brexit result. Each of these topics have had a huge impact on everyone living within the UK and as such, it’s worthwhile having a clear understanding of what each party is suggesting before making your decision on who to vote for.
Of course, whilst we all have an active interest in personal finance, who you would prefer to see as the country’s leader depends entirely on what’s important to you and what pledges each party is making when it comes to reflecting these factors.
You might even find that another party that we haven’t discussed here, better fits your needs than the main parties discussed. We would advise having a thorough look through each party manifesto, or take a look at the BBC’s Manifesto guide, to see which best meets your own wants and needs.
Your vote is so important to the future of the UK and the economy and so it’s well worth having an understanding of how each party could affect you before heading to the polling station on Thursday.