Politicians have been making pledges, bribes
and assurances left, right and centre over recent weeks in an attempt to snatch
votes in what was believed to be the tightest election in a generation. In the
end, the Conservatives scored a surprise decisive election victory.
So what does the Tory win mean for your money?
1. Inheritance Tax
The Conservatives promised a new £175,000 per
person transferable allowance for married couples and civil partners when their
main residence is passed down to children on death. This would mean that –
combined with the existing £325,000 nil-rate band each person has on death,
parents would be able to pass on property worth up to £1million free of
inheritance tax.
2. Taxable Income
The yearly tax-free personal allowance will
rise from £10,600.00 to £12,500.00 under a Conservative Government.
If you’re a higher rate taxpayer, you could
also see more money in your pay packet thanks to a pledge to raise the 40 per
cent threshold from its current level of £42,386.00 a year to £50,000.00.
The Conservative party pledged vehemently that
you would not see Income Tax rise, National Insurance or VAT.
Lower-paid workers would also be slightly
better off as the party has also vowed to raise the minimum wage to around £8.00
an hour in the next five years.
However unlike Labour, the Conservatives made
no pledges to end zero hours contracts.
3. Cash Back House ISA
First-time buyers were promised access to all
sorts of schemes to help them on to the property ladder, regardless of which
party gained power. Each promised to build more homes to increase supply and
had other initiatives to make homeownership more affordable. In the short-term,
these could provide a real boost to first-time buyers. However critics have
argued that offering more cheap cash to buy homes will only boost demand and
therefore prices in the long-term, making homeownership even less affordable
eventually.
The flagship Conservative policy is that
tenants of housing association properties would be able to buy their home at a
big discount under a new ‘Right to Buy’ scheme extension.
Aspiring homeowners under a Conservative Government
would have access to a Help to Buy ISA, which would top up £50.00 for every
£200.00 saved towards a deposit, up to a maximum top-up of £3,000. This was
announced in the March Budget.
Buyers who can scrape together a 5% deposit
could apply for a five-year interest-free Government loan equivalent to 20% of
a new-build property’s value under the existing Help to Buy Scheme. This was
due to be pulled next year, but would now be extended until 2020.
4. Pensions
Pension freedom rules were ushered in on 6
April 2015 (as an election sweetener) to give people much more flexible access
to their retirement pots and they can now invest or spend it as they wish after
the age of 55. There had been concerns that a Labour Government would undo some
of these changes, although it was unlikely all would be swept aside. Now the
new rules should remain and be allowed to become entrenched.
Existing pensioners were set to do well,
regardless of what Government we ended up with. All parties promised to keep
the triple lock formula, which will see the State Pension continue to rise by
whichever is highest out of consumer price inflation, average earnings or 2.5 %.
Pensioners under a Conservative Government
would keep winter fuel payments for older people and free bus passes / TV
licences for all pensioners, regardless of how well off they are.
Wealthy pension savers would be stung under a
Conservative Government, which would restrict tax relief on pension
contributions for those earning more than £150,000 by cutting the annual
pension contribution allowance.
But younger pension savers are also being hit.
The Lifetime Allowance is being cut to £1million, which means that there are
hefty penalties for paying more into a pension once your pot reaches that size.
Most people believe this is not their problem
as they will never manage to save £1million. However, many more younger workers
with well paid jobs, who spend a lifetime investing and benefit from compound
growth over that time, could hit this than realise.
5. State Benefits
The Tories aim to cut £12billion from the
welfare budget by 2017/2018. However, few details on where cuts will be made
have been revealed. It has, however, pledged to cap benefits at £23,000.00 (down
from £26,000.00 a year) and to freeze benefits.
One change will be the removal of Jobseeker's
Allowance for 18-21 year-olds, to be replaced with a Youth Allowance available
for six months after which young people will have to take an apprenticeship,
traineeship or daily community work for their benefits. People aged 18-21 on
Job Seeker's Allowance will no longer have an automatic entitlement to Housing
Benefit.
6. Childcare
The Conservatives have pledged to double to
amount of free weekly childcare for working parents with children aged three or
four to 30 hours - worth around £5,000.00 a year.
...And the changes you will not see
Tuition fees will remain at £9,000.00 and
future rises have not been ruled out by the Conservatives. Ed Miliband had
pledged a Labour Government would have cut fees to £6,000.00.
Zero hours contracts will not be banned - a
measure also proposed by Labour.
Energy bills will not be frozen for the next
two years, a plan also put forward by Labour.
The so-called 'bedroom tax' will not be
abolished - a system whereby tenants on housing benefit have payments cut by 14
% if they have an unused bedroom.
People living in expensive properties will not
face a mansion tax. Labour had planned a contentious tax that was expected to
cost those with homes worth £2 million to £3 million at least £3,000.00 a year.
Paternity leave will not be doubled from two to
four weeks - an increase proposed by Labour.
