What a Conservative Government means for your Money
12 May 2015 | COMMENTS: 0 | Author: Ryan Smith | General
Last week, in one of the most uncertain General Elections in recent history, the Conservative Party landed a surprise victory.
With the Conservatives in Westminster, the pledges made by the party will affect UK citizens across all aspects of their life, no matter their age or circumstances.
Here at Local Financial Advice, we’re taking a look at just what the Conservative government will mean for your money, based on some of their most significant proposals.
The Conservatives are looking to introduce an inheritance tax relief on main properties.
In additional to the current £325,000 limit before IHT is to be paid (combined with a spouse up to £650k), there will be an additional personal allowance of £175,000. Again, combined with a spouse and your personal allowance, you could pass on a home up to £1million to a beneficiary, completely free of IHT.
Take Home Pay
This year’s Budget already saw an increase to the tax-free allowance, up to £10,600. The Conservatives want to raise this to £12,500.
Higher rate tax payers may be better off with a pledge to raise the 40 per cent threshold from £42,386 to £50,000.
The minimum wage is also rumoured to rise to around £8 an hour within the next 5 years.
First time buyers could benefit from the new Help to Buy ISA to be introduced in the autumn of 2015. This will top up £50 for every £200 saved towards a first time home deposit (up to a maximum top up of £3,000).
The Help to buy scheme, which allows buyers to raise a 5% deposit in exchange for a five-year interest free loan of up to 20% of the home value was set to be scrapped next year. It will now be extended until 2020.
The Right to Buy scheme will also be extended, allowing housing association tenants to purchase their homes at a reduced cost.
The recent pension freedoms that came into effect on 6 April 2015 will remain, giving flexibility to the way pensioners access their funds.
The Triple Lock State Pension formula means the state pension will continue to rise every year, either with inflation, earnings or at 2.5 per cent – whichever is highest.
Pensioner benefits such as the Winter Fuel Allowance, free bus passes and free TV licenses will not be means tested and will be available to all.
There is expected to be around £12billion worth of cuts to the welfare budget by 2017-18. To work towards this goal, benefits will be capped at £23,000 per household, down from £26,000 per year.
Housing Benefit and Job Seekers Allowance will also be removed for 18-21 year olds, and replaced with a 6 month Youth Allowance.
There is a pledge to double free weekly childcare for children aged three or four. Working parents will see their free childcare hours increase to 30 hours, equivalent to around £5,000 per year.
The Conservatives have pledge to freeze rail fares for five years, saving commuters an average of £400.
Annual rises for commuter tickets will also be capped in line with inflation.
There are no pledges to reduce tuition fees from £9,000 and future rises have also not been ruled out.
There will be no freeze on energy bills for the next two years.
The so-called ‘bedroom tax’ – the limiting of housing benefit claims from council or housing association tenants with ‘spare’ bedrooms – will not be abolished.
The mansion tax was a Liberal Democrat policy, taxing properties worth over £2million to reduce the deficit by around £1.7billion. Despite only affecting around 0.5% of properties in the UK, this will not be in place under a Conservative government.
There will be no help-to-rent scheme set up to assist renters in saving a deposit, as proposed by the Lib Dems. There will also be no 3-year guaranteed rent periods or a rent cap as proposed by the Labour party.
The Labour party pledged to double paid-paternity leave from 2 weeks to 4 weeks. Paternity leave will not be doubled.
Image Source: Image Courtesy: Department for Business, Innovation and Skills (staging.flickr.com/photos/bisgovuk/6331625205), Licensed under the Creative Commons Attribution-NoDerivs 2.0 Generic