Money blog: 9 ways election result could affect money in your pocket

An election has been called, and the main parties now have six weeks to make their pitch to voters.

Central to their manifestos will be what they will do with your money – their plans for taxes, pensions, childcare and so on.

So what have the Conservatives and Labour said so far on money matters, what has been reported in the media and what could change with a new government?

Triple lock and pension age

This is a key issue for many voters, particularly older ones – traditionally more likely to vote Tory.

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 Rishi Sunak and Sir Keir Starmer have committed to the policy for the next five years. Reminder – the lock guarantees the state pension rises by the highest of average earnings growth, inflation or 2.5%.

Another key issue is retirement age: Mr Selby says that although neither party is likely to talk about it on the campaign trail, there’s a chance pension age increases will come into focus for the next government.

“The current state pension age is 66, with plans in place to raise this to 67 by 2028 and 68 by 2046,” he says. “However, there have been calls from various quarters to accelerate that timetable in order to save the Treasury money.”

Lifetime allowance

According to reports, Labour would consider plans to reintroduce the lifetime allowance – the limit on pension pots someone can build up over their lifetime without a tax penalty. It was abolished in April this year.

We’ll see if this is actually something they commit to in the coming weeks, however.

Automatic refunds for train delays

Labour has pledged to renationalise rail services within five years. Automatic refunds for train delays and better internet connection on trains are also planned.

VAT on private school fees?

This idea has been mooted by Labour several times in recent years.

Keir Starmer said it was not an “attack on private schools” but a way to get more funding for state schools. He suggested that schools could absorb the cost increase rather than passing it on to parents in fees.

Lost pensions

Tackling the issue of “lost” pension posts will probably be a “big focus” for the next government, Mr Selby, from AJ Bell, says.

An estimated £27bn of pensions money is sitting in accounts that have become disconnected from their owner.

“Proposed pensions dashboards should help make it easier for Brits to find lost pensions. The reforms, due to be introduced in 2026, will allow people to see all of their retirement pots in one place, online,” he says.

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.

It has since been delayed pending a consultation.

Labour has said it will look to simplify ISAs, something Mr Selby welcomes: “No sensible person designing a savings system from scratch would propose the plethora of different ISAs we have on offer today.”

However, Labour has offered much detail for its simplification plan.

Tax

Tax is a key battleground in any election.

It’s a divisive issue, as Laura Suter, personal finance director at AJ Bell, concedes: “For some, taxes need to rise in order to fund already-stretched public services. For others, ever-increasing tax bills are evidence that public spending is out of control and taxes need to be cut to incentivise growth.”

The Tories are likely to tout cuts to National Insurance as proof of their commitment to cut taxes, she says – we have already seen two 2p cuts in the last year.

Labour will argue, though, that their rivals have increased taxes by stealth by freezing tax thresholds – and can point to record high tax burdens facing Britons.

“In truth,” Ms Suter says, “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.”

Housing and first-time buyers

This is another big concern for voters, with the potential to divide young and old.

“First-time buyers will want to see an extension to support helping them get a foot on the ladder,” Ms Suter says, “while existing homeowners will hope for policies that moderate inflation and increase the likelihood of interest rate cuts.”

She highlights an issue for aspiring homeowners with the Lifetime ISA.

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 it would be £580,500 today, she says.

“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,” she says.

“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

The Tories announced an expansion of free childcare to all children under five in England last year.

Shadow education secretary Bridget Phillipson had refused to commit to the £4bn expanded scheme, but Labour has since said it would keep it in place.

Ms Suter calls the policy a “helpful boost” to parents’ finances, saving them almost £3,500 a year on nursery fees depending on location, but cautions: “It’s essential that the next government keeps a close eye on the rollout and ensures that any wrinkles in the system are ironed out quickly.”

There’s a case for going further, she says, and reforming the entire system, “which provides a hotchpotch of different subsidies for parents that frustrates families, leaves nursery finance departments scratching their heads, and creates an extra admin burden for the tax office.”