As the dust settles on a Conservative majority, below is a summary of what this might mean for you and the pound in your pocket:
INCOME TAX
No increase in Income Tax or National Insurance rates
The Tax free personal allowance is to rise from £10,600 to £12,500 – by 2020
The threshold at which the higher rate 40% tax rate applies – to be increased from £42,385 to £50,000
The tax regime for non-domicile (“non-dom’s”) to remain in place
VAT
No planned increase in the rate of VAT.
No planned increase in the threshold where businesses are required to register for VAT.
CORPORATION TAX
To remain at 20%
PENSIONS
The lifetime allowance to be cut from £1.25m to £1m – in April 2016
The basis to which state pensions rise by – the higher of 2.5%, inflation or earnings (the so called “Triple lock”) – is to remain.
A new policy for those earning over £150,000 whereby they will be restricted in the amount they can put into pensions to only £10,000.
The ability for pensioners to sell their annuities (a Coaltion goverment policy), to possibly be scrapped.
INHERITANCE TAX
To increase the tax free allowance for married couples to £1m (currently £650,000) through the grant of an additional allowance for people’s main homes.
TAX RETURNS
As previously proposed in the Chanceller’s budget in March 2015, a proposal to abolish the year-end tax return, in favour of online tax accounts.
SAVINGS AND MORTGAGES
A commitment to keep interest rates low – which is good news for those with a mortgage, and bad for savers.
HOUSEHOLD SPENDING
Fuel duty to be frozen
Rail fares to be frozen
A new policy to make switching between energy firms much easier, to improve competition
But no cap on energy bills
PROPERTY AND HOUSING
Extension of the Help to Buy mortgage scheme to cover another 120,000 homes
A new Help to Buy ISA, with first time buyers who save £12,000 being rewarded with an additional £3,000 towards their first home
Extension of the Right to Buy scheme for tenants in local authority homes
SUMMARY
The above is all based on the Conservative party manifesto and recent Chancellor’s budget.
What is not clear is the timetable for all of these planned policies and initiatives, but with the possibility of an emergency budget now that the Conservatives have a majority and mandate to implement their manifesto alone, we expect further clarity and detail in due course.
