10 ways the General Election result could affect your money from tax to wages

The UK will be holding a general election this year

The UK will head to the polls for a General Election on July 4 - and the result could have a major impact on your money.

The cost of living crisis has ravaged Brits across the country for the last two years, and in this election, policies on finance could sway voters. But what policies have been mentioned by the two main parties so far, and how could they impact you? Of course, neither party has put out their official manifesto yet, but both Rishi Sunak and Labour leader Keir Starmer have previously highlighted key changes they would make.

Here we explain some of the major talking points for this election, from taxes to pensions and savings, alongside all the ways current policy pledges could affect your wallet.

Tax

Tax always takes centre stage when it comes to any election campaign. In the past. Last year, the overall level of taxation was at its highest for more than 70 years - and currently it's forecast to only get higher. Taxes are a divisive issue, for some higher taxes are needed to fund already stretched public services, while for others ever-increasing taxes are evidence that public spending is out of control.

Laura Suter, personal finance director at AJ Bell, said the Tories would like to "tout" two cuts to National Insurance this year as proof of their commitment to cut taxes. While Labour will argue that the Tories have actually increased taxes by "stealth" through their freezing of the tax brackets. Laura added: "In truth, there is very little wiggle room in either direction. Taxpayers will struggle to stomach further tax increases, while tax cuts will eat into the future Chancellor’s budgets, which is crucial to any spending commitments either party plan on.”

Labour’s Rachel Reeves has said the party would not seek to undo the Government’s 2p cut to National Insurance tax if it came to power and would look to other measures to raise funds. This includes scrapping the "non-dom" status, cracking down on tax avoidance, and introducing VAT and business rates to private schools. Chancellor Jeremy Hunt has recently hinted at a desire to cut National Insurance even more if he can afford it.

Pensions

Pensions triple lock

Another thing that will likely be central to this year's election will be pensions. It is always a key issue for many Brits particularly older ones who are traditionally more likely to vote Tory. For starters, the Tories' state pension triple lock - first implemented in 2011 - has seen spending on the benefit increase tenfold. and research by the Institute for Fiscal Studies (IFS) says continuing policy could cost between an extra £5billion and £45billion a year by 2050.

Tom Selby, director of public policy at AJ Bell, says the pension triple lock is one of the few things both parties have been "crystal clear on". Both Labour and the Conservatives have pledged to keep this policy in place if they are voted in.

State pension age

Tom notes that another key issue would be the retirement age and "while neither party is likely to talk about it in their manifesto" Tom says planned state pension age increases may also come into focus for the next administration. He added: "The current state pension age is 66, with plans in place to raise this to 67 by 2028 and 68 by 2046. However, there have been calls from various quarters to accelerate that timetable in order to save the Treasury money.”

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown warned that parties needed to "take care" when committing to the pension triple lock as over time they would have to raise the state pension age. Helen added: "Pensions are something we all need to be in for the long haul and yet they’ve been subject to the whims of the electoral cycle.

"Such an approach risks undermining people’s confidence in their retirement planning when they need stability and predictability in areas such as pensions taxation. This will give them the confidence that the money they save today, will fund their retirement rather than disappear into the hands of the taxman."

The pension lifetime allowance

The lifetime allowance is the total amount you can build up in all your pension savings without incurring a tax charge and the Tories scrapped it this April. However, Tom says that Labour has hinted that it would reintroduce it again. Tom said this would be a "retrograde step" which would add "unwelcome complexity to an already complex system". He said: "It would also run directly counter to wider efforts to boost investing, as any lifetime allowance tax charge would punish those who enjoy strong investment growth."

Tom says all parties in this election needed to focus on keeping "pensions as simple as possible" and should avoid turning pension tax into a "political football". He added: "By their very nature pensions are a tool for long-term planning and the public need to be confident that governments won’t move the goalposts every five minutes.”

ISAs

Simplifying ISAs

At the last budget in March, Jeremy Hunt announced the creation of a British ISA - which would allow savers to invest £5,000 a year tax-free in the UK stock market. However, this has been delayed pending a consultation. The Treasury also announced that multiple ISA subscriptions of the same type, and partial rather than full transfers between providers, will be brought in.

Labour has pledged to "simply ISAs" which Tom says would be welcome. He said: "No sensible person designing a savings system from scratch would propose the plethora of different ISAs we have on offer today."

However, Labour has not offered much detail for its simplification plan as of writing although it could include increased utilisation of stocks and shares ISAs. He said "A full review of ISAs should be seen as an opportunity to prevent them being suffocated by incremental complexity, which could eventually see ISAs turned into a political football in the same way as pensions taxation".

Lifetime ISA

Another "big concern" for voters is housing and it's costs - which Laura warns could cause a major divide between young and older voters. Laura noted that first-time buyers want to see an extension to the support which would help them get their foot on the ladder while homeowners will "hope for policies that moderate inflation and increase the likelihood of interest rate cuts."

The lifetime ISA is one of the main ways younger people are saving for their first home however the property limit she says, is "frozen in time" at £450,000 since the ISAs were launched seven years ago. Since then, average house prices in the UK have gone up from £219,000 to £283,000. If the limit had increased with house prices, Laura says it would be £580,500 today - more than £130,000 higher.

She said: "Many aspiring homebuyers will have signed up to the accounts years ago, not realising that it would take so long to get on the property ladder and that they might fall foul of the property limit in the future. What makes the situation more galling for first-time buyers who have been priced out of using the Lifetime ISA is that they now face losing some of their own money when they withdraw their cash from the accounts, thanks to the onerous withdrawal penalty. Anyone who exceeds the £450,000 limit, even by just £1, will be hit with the 25% exit charge on the Lifetime ISA, as their purchase will no longer be within the rules."

Childcare

In the 2023 Spring Budget, Jeremy Hunt announced free childcare would be extended to two-year-olds from April 2024, with younger age groups covered over the following 18 months. Laura says the policy is a "helpful boost" to parents' finances, saving them almost £3,500 a year on nursery fees depending on location.

Laura highlights while the policy is popular, it doesn't tackle the shortage of childcare in many areas of the country, which prevents parents from returning to work. She added: "It also doesn’t help the many parents who have to pay nursery top-ups to the free hours, have more than one pre-school child or who earn too much to get the support."

However, the future of the policy has been thrown into doubt as shadow education secretary Bridget Phillipson had refused to commit to the £4billion expanded scheme, but Labour has since said it would keep it in place. Future reforms "could be possible" including a major reform to the entire system. Laura added: "It’s possible a future government could go back to the drawing board with a complete re-think on the way parents are supported with childcare and the cost of starting a family.”

Automatic refunds for train delays

Labour has pledged to renationalise nearly all passenger rail services within five years if it wins the next election. It says a new public body would inherit existing contracts when they expire. Automatic refunds for train delays and better internet connection on trains are also planned.

Energy bills

The Labour Party has outlined plans to set up a Great British Energy Company – a publicly-owned clean power company. Labour said the publicly owned energy company would “cut bills for good and boost energy security”. The party says it will pay for it using a windfall tax on oil and gas companies. A temporary windfall tax known as the Energy Profits Levy is already in place under the Conservatives, but Labour has previously indicated it could increase the levy from 35% to 38%.

Minimum wage changes

In March 2024, Labour said it would "strengthen" the minimum wage that employers must pay to "ensure it reflects the cost of living". However, it has not been confirmed exactly what this rate would be and what new laws could be brought in.

The Tories raised the UK's National Living Wage and the Minimum Wage in April this year. These are the rates your employer has to pay you by law - regardless of whether you’re in a full-time, part-time or temporary role. The National Living Wage was coined by former Chancellor George Osbourne in 2015 and was first introduced in April 2016 for workers aged 25 - although it has now been lowered.

From April 1, the National Living Wage increased to £11.44 an hour and the age bracket was also expanded to include those over the age of 21, instead of over the age of 23. The National Minimum Wage for people aged 18 to 20 rose to £8.60, and under-18s and apprentices saw their pay increase to £6.40.

However, these rates are much lower than the Real Living Wage which is based on the cost of living and how much families need to live. It is paid to people over the age of 18 and is currently set at £12 an hour outside of London, and £13.15 an hour inside the capital. More than 460,000 people working for 14,000 employers are paid the Real Living Wage.