What the Conservative manifesto means for your finances: from an NI tax cut to pensions and stamp duty

The Conservative Party has launched its manifesto in a bid to woo voters ahead of July’s general election with a package of tax cut measures.

As well as another 2p cut to national insurance, Rishi Sunak has pledged to protect pensions from tax and offer more help to first-time buyers, as he seeks to build a broad coalition of voters.

We look at what the proposed policies would mean for your finances.

Taxes: IN cut and no increase in VAT or personal income tax

The Conservatives have pledged to cut taxes for “earners, parents and pensioners” and revealed £12bn worth of tax cuts in the next parliament.

Top of the agenda is another 2p cut to national insurance, from 8p to 6p. It comes after Jeremy Hunt cut NI contributions from 12p to 10p in the March Budget, just two months after another 2p cut came into effect in January.

The Conservative manifesto also pledged to abolish the main rate of self-employed NI contributions entirely, after scrapping Class 2 contributions in April.

The Conservatives said the move would be funded by welfare reforms and a crackdown on the “unsustainable” rise in working-age welfare.

Shaun Moore, tax and financial planning expert at Quilter, said: “The headline figure is that someone earning £50,000 today will be £749 better off under the proposed rules to be announced in the manifesto.

‘Similarly, someone with an approximate average salary of £35,000 in the UK will earn £449 a year. Whether this changes the dial enough for a party that is lagging badly in opinion polls remains to be seen.

‘This may be a case of too little too late. The reality is that many people are looking at the difficulties facing public services at the moment and wondering how a tax cut like this will affect the NHS, education and other state supports.

“Balancing individual financial relief with the sustainability of public services will be key to ensuring this change benefits society as a whole if the party is given the opportunity to implement it.”

The switch to national insurance will have no effect on pensioners who do not pay the tax.

The party also promised not to increase income tax or VAT.

However, the decision not to end the freeze on income tax thresholds will continue the fiscal drag that has seen more income dragged into the tax net at the bottom end and record numbers now paying tax rates of 40 and 45 percent.

Those earning more than £100,000 will continue to lose their personal allowance and will pay a 60 per cent tax rate up to £125,140.

> Simon Lambert: The British tax system is a disaster – here’s how to fix it

Pensions: The triple lock plus

Conservatives hope the ‘triple lock plus’ policy, which promises state pensions will never be taxed, will influence pensioners.

In addition to the triple lock that increases the state pension, in line with the highest inflation, earnings or 2.5 per cent, the tax-free personal allowance for pensioners will also increase to equal the annual state pension.

The personal allowance of £12,570 has been frozen since 2021, meaning more pensioners now pay income tax if they receive the full state pension of £11,500 a year and some private pension income.

The promise to maintain the triple lock while continuing to freeze the personal allowance meant the state pension was projected to exceed the basic tax threshold. The triple lock plus puts an end to that.

The Conservatives say their policy will mean the average pensioner is expected to see their state pension rise by £428 next year and by £1,677 at the end of parliament, reaching £13,200 a year.

They say pensioners will get a £95 income tax cut next year, which will rise to £275 at the end of parliament.

We explain how the Conservatives’ triple lock plus state pension plan would work.

The Conservatives have also promised to protect pension savers, saying: ‘Under our new Pension Tax Guarantee, the Conservatives will not introduce any new tax on pensions. We will keep the 25 per cent tax-free lump sum and maintain tax relief on pension contributions at its marginal rate. We will not extend National Insurance to employer pension contributions.’

All current benefits for pensioners will remain in place, including free bus passes, winter fuel payments, free prescriptions and television licences.

Housing: Stamp duty and help to buy

The Conservatives have pledged to bring forward a £1bn support package to help first-time buyers, admitting it has become harder to buy a home.

The party says it would introduce government-backed mortgages to help first-time buyers get on the property ladder with a 5 per cent deposit.

The scheme, which is modeled on the Help to Buy loan scheme which ended last year, could be used for all home purchases under £400,000.

David Sturrock, senior research economist at the Institute for Fiscal Studies, said: “A new help-to-buy loan scheme could help potential buyers get on the housing ladder by reducing the deposit they require and making payments more affordable. more manageable in the short term.

The plan proposed by the conservatives would not only expand access to credit but would also constitute a subsidy to the real estate market because the loan on the capital initially has no interest.

“While the Government may end up making a profit on the scheme if house prices rise, experience from previous schemes suggests that part of the subsidy will be captured by developers in the form of higher prices and profits and that some of those who buy You could do it without the schematic.

“Any new plan should try to learn lessons from the past.”

Sunak also announced that the stamp duty threshold for first-time buyers will be made permanent.

The temporary £425,000 nil rate threshold for first-time buyers, which was due to fall to £300,000 in April 2025, will be made permanent.

Elsewhere, a two-year plan would allow landlords to sell homes to their tenants without paying capital gains tax and the party has pledged to build 1.6 million new homes during the next parliament.

> Stamp duty calculator: how much you pay to move house

Child benefit: an increase to £120,000

The Conservative manifesto says they will raise the threshold for child benefit payments from £60,000 to £120,000 and, crucially, assess household income.

Currently, child benefit is £25.60 per week for the eldest child and £16.95 for additional children, but is removed for higher earners.

Child benefit starts to recover if one member of the household earns £60,000 and payments stop completely at £80,000.

The phase-out thresholds were raised in the recent Budget from the £50,000 to £60,000 range where they had been stuck since former Chancellor George Osborne introduced the high-income child benefit charge.

> Should I apply for child benefit? What it costs and the most common traps

The removal of child benefit is currently based on either parent’s individual income exceeding the threshold, penalizing single-income or unequal-income families.

Currently, a family with two people earning £59,000 would keep all of their child benefit, while a household with one person earning £80,000 would lose all of it.

The threshold at which parents will have to start repaying child benefit will now double to £120,000 and will be assessed based on household income. Child benefit will be phased out until household income reaches £160,000.

The Conservatives say this will benefit 700,000 families and save them an average of £1,500.

The party has again pledged to end the “injustice” of the current system, which the Conservatives themselves introduced 13 years ago, as it calculates the charge on an individual rather than the total household income.