All the main parties’ 2024 General Election manifestos have addressed several policy areas, including the financial aspects of pensions and tax. But what are the implications for advisers and clients? Let’s look at each of the areas in more detail.
Pensions
Pensions and pensioners have found themselves centre stage during this election. With older people more likely to vote and have more conservative leanings, it’s no wonder these factors shape the main parties' strategies when it comes to pensions policy.
Labour and the Liberal Democrats have committed to retaining the state pension triple lock, while the Conservatives have gone one step further by pledging to introduce a "triple lock plus" policy. This will ensure state pensioners have a personal allowance above the full new state pension, exempting it from income tax. The next government will need to address fundamental questions about the state pension's value and eligibility age. This uncertainty may mean more clients seeking advice on re-evaluating their financial plans.
Labour have confirmed they will not reintroduce the lifetime allowance (LTA), which shows the party has responded to concerns from the industry. The decision not to reinstate it means that, should they get into power, people can plan for their future with more confidence - some stability that will be welcomed by advisers.
Labour has also stated they would “undertake a review of the pensions landscape to consider what further steps are needed to improve pension outcomes and increase investment in UK markets”. This commitment to reform workplace pensions by creating fewer, bigger, and better-managed schemes addresses the long-term challenges of providing sustainable retirement income for all, regardless of wealth. For advisers, this could mean more people seeking retirement advice as the number with a substantial pension pot grows.
Tax
The flagship tax proposal from the Conservatives is to cut national insurance contributions (NIC) by a further 2% by 2027, with a long-term aim to eliminate the tax entirely when possible. This cut, combined with the previous reductions to NIC, amounts to a significant tax reduction, estimated to be worth £1,300 a year for the average worker.
Neither the Conservatives nor Labour have touched the contentious issue of frozen tax thresholds, which has pushed millions of workers into paying higher rates of income tax. The numbers paying higher-rate tax will increase to 2.7 million by April 2029. This could provide advisers with the opportunity to speak to those impacted to re-evaluate their financial plans.
One of the headline grabbers of the election campaign has been Labour’s decision to introduce VAT on private school fees. This means another additional financial burden for many parents, on top of the already steep fee increases in recent years. Parents in this situation may look for financial advice on how to approach this situation to help tackle any shortfalls.
Labour's tax proposals promised no tax increases for working people and ruled out rises in income tax, national insurance and VAT. However they omitted any mention of extending temporary tax cuts, such as the 5p fuel duty cut and the stamp duty holiday, both set to end next year.
With regards to housing, the Conservatives announced stamp duty reforms, including the abolition of stamp duty for first-time buyers and the extension of the Help to Buy scheme. While these have been criticised as extensions to existing schemes that haven’t worked, they are designed with the aim of allowing more people onto the housing ladder, who will require financial advice when doing so.
Written by The Lang Cat
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