In the run-up to this year’s election, lots of promises were made by the Conservatives in their bid to win re-election, and now that we have a Conservative majority Government, it’s likely that much of their manifesto will be implemented. Headlines were generated in particular by the announcement of the extension of “Right to Buy” to housing association tenants as well as an increase in the current inheritance tax threshold.
Some of the key policy announcements made by the Conservatives in the run up to the election, including in their manifesto, are as follows;
- Extend Right to Buy to housing association tenants in England.
- Legislate to keep people working 30 hours on minimum wage out of tax. This means raising the tax-free Personal Allowance to £12,500 by 2020. The 40p Income Tax threshold will also increase to £50,000.
- There will be an increase to the Inheritance Tax threshold for married couples and civil partners to £1m, with a transferable main residence allowance of £175,000. This will be able to be covered by a reduction of the tax relief on the pension contributions for those who are earning over £150,000.
- There will be no increase in VAT, national insurance contributions or income tax.
- A commitment to the promise regarding pensions to give people the freedom to use their pension savings as they want and to pass them as tax-free.
- The Government will continue to increase the basic state pension by at least 2.5% through the “triple lock”.
- In respect of financial services regulation the Conservative manifesto also stated that the UK will have the best financial services regulation in the world, although no specific details were given.
Following the election, which saw former Pension Minister Steve Webb lose his seat in Parliament, savings champion Ros Altman will be made a peer and minister by the new Conservative government and appointed the new Pensions Minister. It’s widely expected that Ros Altman will continue a pensions reform agenda following in the footsteps of her predecessor in the role – so expect more pension changes (hopefully for the better) in the coming 5 years.
Ros Altman has previously criticised the Lifetime Allowance and called the reduction in the Lifetime Allowance limit from £1.25m to £1m “dreadful policymaking”. Whilst it’s unlikely that the Lifetime Allowance will be scrapped altogether (it wasn’t in the Conservative manifesto), further protections and reform could be forthcoming, together with possible changes to the tax relief regime.
The Chancellor, George Osborne, has also announced that the first Budget of the new Parliament will be held on Wednesday 8th July, which will be George Osborne’s first opportunity to shape his own Budget without any negotiations required with their former Coalition partners the Liberal Democrats or any other party.