It’s polling day today (4 July), which means it’s over to you to decide the next UK Prime Minister. There’s nothing more that any of the political candidates can do.
In recent days, Prime Minister Rishi Sunak said he has “absolutely not” given up on winning Number 10, while Keir Starmer said a big Labour majority would be “better for the country”.
Last month, the two parties unveiled their election manifestos – and there were few surprises in either document.
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The key message the Conservatives wanted their supporters to come away with was ‘tax cuts’. Sunak’s headline pledge was a 2p National Insurance cut. This came after the party previously hinted it would like to scrap National Insurance further down the line.
However, critics have said the Conservative manifesto isn’t radical enough to close Labour’s comfortable lead in the polls. Sunak's party has said it will keep income tax thresholds frozen and there was no mention of inheritance tax. This will have come as a disappointment to many Tory voters.
Meanwhile, the key word in Labour's manifesto was “stability”. Labour leader Keir Starmer has said he is leading a “changed Labour Party” – a party which champions wealth creation and is pro-business. Despite Sunak’s disputed claims that Labour will put taxes up by £2,000, Starmer promised he wouldn’t raise income tax, National Insurance or VAT.
Criticism of Starmer's manifesto has been similar to that of Sunak's. Commentators have pointed out that it offers little in the way of new policies, with most of the pledges having been announced prior to the manifesto launch.
We take a closer look at their policies and what they could mean for your money.
What will the general election mean for your taxes?
Taxation is an important topic heading into any general election – and Labour and the Conservatives have come to blows on the matter in recent weeks.
In the first TV debate of the campaign period, Sunak claimed he had seen Treasury figures which showed taxes would rise by £2,000 under a Labour government. However, Starmer argued that these figures were misleading and that the Prime Minister had “put pretend Labour policies to the Treasury” to arrive at the sum.
After the debate, Treasury permanent secretary James Bowler distanced himself from the figures, arguing that the Conservatives included “costs beyond those provided by the civil service”. So, what exactly would a Labour or a Conservative government do with taxation?
- Income tax: Both parties have committed to keeping income tax thresholds frozen until 2028. This could see almost four million taxpayers pulled into higher tax bands thanks to fiscal drag, according to forecasts from the Office for Budget Responsibility (OBR).
- National Insurance: In their manifesto, the Conservatives have promised a 2p National Insurance cut if they win the election. Hunt has already cut the levy twice in the space of six months (from 12% to 10%, and then down to 8%). Labour has said it won’t match this pledge, calling the Tory manifesto a “desperate wish list”.
- VAT: Both the Conservatives and Labour have pledged to keep VAT frozen at 20%. The only exception is that Labour is planning to end tax breaks for private schools, if it gets the keys to Number 10.
- Council tax: The Conservatives have said they won’t carry out any council tax revaluations or increase the number of council tax bands. This promise is part of the party’s “family home tax guarantee”.
- Private residence relief: As part of the same guarantee, Hunt has also promised to retain private residence relief. This measure means homeowners don’t currently have to pay capital gains tax when they sell their main home.
- Stamp duty: The Conservatives have promised they won’t raise stamp duty if they win the election. On top of this, the party has pledged to permanently increase the stamp duty threshold for first-time buyers to £425,000. In contrast, Labour say they will lower the first-time buyer stamp duty exemption threshold from £425,000 to £300,000. Labour will also increase stamp duty for overseas buyers by 1%, using the money to fund more planning officers in local authorities to “get Britain building again”.
- Inheritance tax: The Conservatives were silent on the topic of inheritance tax in their manifesto. Many Tory voters would have been hoping to see this slashed or even abolished, particularly after Hunt referred to the tax as “profoundly anti-Conservative” in an interview with The Telegraph in May. Labour has said it will end the use of offshore trusts, which some currently use to shelter assets from death duties.
- Capital gains tax: In the private equity industry, performance-related pay is currently taxed as capital gains rather than income. Labour says it will close this loophole.
What will the general election mean for your pension?
In the first election TV debate, Sunak claimed Labour is coming for your pension. In the most recent debate, he also said the state pension would be subject to a "retirement tax" under Labour.
But are these claims true? Starmer has committed to maintaining the triple lock and has recently done a U-turn on his plans to reintroduce the lifetime allowance, undermining these claims.
We share a round-up of the key pension promises that have been announced by both parties.
Triple lock plus
In addition to retaining the triple lock (which both parties have committed to), the Conservatives have promised to increase pensioners’ personal allowance each year in line with earnings, inflation, or 2.5% – whichever measure is highest.
Sunak said this measure (dubbed the triple lock plus) would ensure pensioners never had to pay tax on their state pension. However, analysis from former pensions minister Steve Webb suggests the issue is actually more complex than Sunak allows.
The full state pension has been creeping closer to the top of the personal allowance in recent years thanks to fiscal drag.
Pensions tax guarantee
In its manifesto, the Conservative Party has committed to a “pensions tax guarantee”. This means it will not introduce any new taxes on retirement savings. This includes maintaining the 25% tax-free lump sum, as well as maintaining tax relief on pension contributions at their marginal rate.
The party has also promised not to extend National Insurance to employer pension contributions.
Lifetime allowance
Hunt scrapped the lifetime allowance in his 2023 Spring Budget, with the change coming into effect at the start of the 2024/2025 tax year. Previously, this measure had set a limit on the total amount savers could put into their pension pots before a tax penalty was due. Prior to 6 April 2024, this was £1,073,100.
Labour criticised the decision at the time and pledged to reinstate it. However, the party has since done a U-turn on this policy.
Detailed pensions review
Labour has promised to carry out a detailed review of the pensions and retirement savings landscape, if it gets the keys to office.
“This will mean working with industry and consumer groups to ensure savers are getting the best possible returns, and to identify and tackle the barriers to pension schemes investing more into UK productive assets,” it has said.
Hunt has also been trying to tackle the issue of pension schemes underinvesting in UK assets through his Mansion House reforms.
Getting on the property ladder
Labour has unveiled a “Freedom to Buy” pledge to help get young people on the property ladder. The party says this scheme will help 80,000 young people become first-time buyers over the next five years.
The policy would be an extended, permanent version of the Conservatives’ mortgage guarantee scheme, which is currently due to expire in June 2025. Mortgage rates have soared in recent years thanks to higher interest rates and Liz Truss’s disastrous mini-Budget. This has turned home ownership into an insurmountable challenge for many.
Alongside the first-time buyer scheme, Labour said it would reintroduce housing targets and reform the planning system to increase the availability of homes.
But, a Labour Party spokesperson recently admitted that first-time buyers would face a hike in stamp duty if it won the election. The party confirmed that, if it forms the next government, the first-time buyer stamp duty exemption threshold will drop back to £300,000.
The threshold was raised in September 2022 from £300,000 to £425,000 and was due to expire in April next year.
Meanwhile, the Conservatives have promised to permanently scrap stamp duty for first-time buyers, up to a threshold of £425,000.
In its manifesto, the party also promised to launch “a new and improved Help to Buy scheme to provide first-time buyers with an equity loan of up to 20% towards the cost of a new build home”. Buyers would only be required to stump up a 5% deposit.
The Conservative Party has also promised to introduce a tax incentive that encourages landlords to sell to their existing tenants.
Supporting renters
Labour has promised to overhaul the way the private rental sector is regulated. This will include immediately abolishing no-fault evictions and empowering renters to challenge unreasonable rent increases, the party has said.
The party also wants to improve building safety regulation to address issues like mould and damp, and to “ensure we never again see a repeat of the Grenfell fire”.
Finally, Labour says it will shut down the leasehold system. Watered down leasehold reforms made it through parliament just before it was dissolved in May.
The Conservatives have also promised to abolish no-fault evictions, adding that they will “strengthen other grounds for landlords to evict private tenants guilty of anti-social behaviour”.
Changes to the ISA landscape?
Investors currently face a high tax burden, with the dividend and capital gains allowances slashed again in the 2024/2025 tax year. Hunt announced plans for a new British ISA in his Spring Budget, which would give investors an additional £5,000 allowance.
MoneyWeek recently looked at what’s rumoured to be included in the British ISA – but after no mention of it in the Conservative manifesto (and a limp reception when it was first announced), there’s a chance it could be dead in the water.
We don’t know much else about what either party will do with the tax wrapper if they win. However, Labour has previously highlighted the need for simplification.
Child benefit and free childcare
A string of childcare policies have been announced in the lead-up to the general election.
Labour has promised to convert over 3,000 classrooms into nurseries in schools with spare capacity (due to falling birth rates), creating 100,000 additional nursery places. The party plans to fund the policy by ending tax breaks for private schools. It has also promised free breakfast clubs for primary school children.
In addition, Starmer’s party has committed to keeping the free childcare reforms introduced under Hunt’s 2023 Spring Budget. Previously, there had been some doubts as to whether Labour would commit to the policy amid concerns about the strain it would put on the sector.
Meanwhile, the Conservatives have been trying to win young families over by promising to increase the threshold at which the child benefit charge kicks in.
Currently, child benefit starts to get withdrawn as soon as one parent earns more than £60,000 a year. The Conservatives have promised to double this to £120,000, as well as moving to a system where the entire household’s income is taken into consideration.
Private school fees
One of Starmer’s six “first steps for change” includes recruiting 6,500 new teachers into the state sector, paid for by ending tax breaks for private schools. Starmer has previously said this measure is “not an attack on private schools”, but a move to help fund improvements to the struggling state system.
Critics of Labour’s policy point out that parents are already struggling to afford private school fees, which have skyrocketed in recent years thanks to high inflation. Fees for the 2023/2024 academic year increased by 8% on average compared to the previous year, according to the Independent Schools Council (ISC).
Other areas of focus in recent weeks
Other topics that have cropped up on the campaign trail include:
- Energy: Labour has said it will set up a new publicly-owned clean energy company, paid for using a windfall tax on oil and gas companies. This would “cut bills for good and boost energy security,” the party suggests. Meanwhile, the Conservatives have promised to build new gas power stations to “back up renewables and prevent the prospect of blackouts”. The party has also promised to scale up nuclear power.
- “Rip-off” degrees replaced with apprenticeships: The Conservatives have announced plans to scrap degrees with high drop-out rates and poor employment prospects, calling them a “rip off”. The party plans to fund 100,000 apprenticeships each year to offer an alternative. Labour has also promised a “youth guarantee”, which will ensure 18 to 21-year-olds have access to training, an apprenticeship or support finding work. The party plans to fund this by “drawing together existing funding and entitlements”.
- Rail services: Labour has said it will renationalise almost all passenger rail services within five years. It is also planning automatic refunds for train delays and a “best fare guarantee so that people can always trust that they're getting the lowest fare for their journey,” says shadow transport secretary Louise Haigh.
- National service: The Conservatives have said they will introduce some form of national service for 18-year-olds, if they win the general election. This would not involve being conscripted into the armed forces, but would require young people to get involved in community service, dedicating one weekend per month over the course of a year.
Labour vs Conservatives in the polls
Now that polling stations are open, the opinion polls have closed. It is a criminal offence to publish a poll or survey once voting has opened, so we won’t have any new data until the exit poll comes out at 10pm.
As of yesterday, the BBC’s poll tracker was showing that Labour had an 18-point lead on the Conservatives. This is a small narrowing compared to earlier in the campaign period, when Labour enjoyed a 22-point lead.
The BBC tracker suggests the Conservatives gained a small amount of support in the final week, but Keir Starmer’s party still remains comfortably ahead. Several polling experts have predicted a decisive Labour majority.
For more on where the other parties rank, and when you can expect to see the exit polls, see our recent piece: “General election: what do the final polls tell us?”
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