Prime Minister Rishi Sunak surprised us all on 22 May, including many in the Conservative Party, by announcing that a General Election will take place on Thursday 4 July.
At the time of writing, the manifestos are yet to be revealed. This is likely to be in early June.
But we already know some of the main two parties’ plans – both Conservatives and Labour are unlikely to increase the main rates of Income Tax, National Insurance (NICs) and VAT, which account for most of the Treasury’s revenue. This leaves the way open for other taxes to be raised or new taxes created.
The Conservatives have already said that they want to abolish employee NICs, but the cost of this is over £40bn, so this is more of a long-term aspiration.
Regarding pensions, both parties are committed to keeping the pension triple lock, whereby the State Pension rises in line with whichever is the highest – average earnings, inflation or by 2.5%. Rishi Sunak also announced on 27 May that the tax-free pension allowance will be raised via a ‘Triple Lock Plus’ if the Conservatives win the General Election, meaning that the personal allowance for pensioners would also increase by at least 2.5% or in line with the highest of earnings or inflation.
Labour has already said it will:
Shadow Chancellor, Rachel Reeves, stated on 28 May, ‘there are no additional tax rises needed beyond the ones that I’ve set out’.
Take sensible steps
Although we can’t foresee what will happen over the next few weeks and months, it’s always a good idea to be sensible with your tax planning, based on how things are at present. It’s unlikely that any major changes would take immediate effect.
Rest assured that we are keeping on top of developments and can help you with financial planning to reduce the amount of tax you pay and safeguard your wealth for the future. We can help – please get in touch.
Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from taxation, are subject to change. The Financial Conduct Authority does not regulate tax planning. The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.
