What the Labor manifesto means for your finances: from income tax to pensions and ‘securonomics’

The Labor Party has unveiled its manifesto as Sir Keir Starmer hopes the desire for change will convince voters to put it in Downing Street this summer.

With polls showing Labor is very likely to form the next government, taxpayers will be watching what the party’s promises mean for their finances.

Meanwhile, the Labor Party is keen not to deter any of those considering voting for it.

The Labor leader has promised a “fiscal lock” with no increase in income tax, IN and VAT rates, while protecting the triple lock for pensioners.

Starmer also pledges to prioritize economic growth, with the launch of a national wealth fund and new housebuilding targets.

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

‘Securonomics’: Betting on growth

The Labor Party promises to turn the page on Tory ideas “that have caused chaos” and is prioritizing economic growth and wealth creation.

Starmer told Labor supporters in Manchester that “social justice and economic growth must go hand in hand”.

Figures from the Office for National Statistics released on Wednesday showed the economy recorded no growth in April, after growth of 0.4 per cent in March.

Starmer said the manifesto was a “total rejection” of “taxing and spending” and would prioritize wealth creation and economic growth.

The party’s manifesto states that Labour’s tax rules “are non-negotiable and will apply to all decisions made by a Labor government”.

His first steps will include achieving economic stability, with “tight spending rules” to grow the economy and keep taxes low.

Their manifesto says: “We will adopt a new approach to economic management – economic security – that understands that sustainable growth depends on a broad base and resilient foundations.”

His plans include a new industrial strategy and a National Wealth Fund to pay for ports and supply factories, new gigafactories and help rebuild the steel industry.

Taxes: No increase in income tax, NI and VAT rates

Starmer has been adamant that taxes will not rise under a Labor government, despite plans for significant investment.

He ruled out an increase in income tax, social security and VAT. The Institute of Fiscal Studies warned that this leaves no room, according to current forecasts, for greater spending than anticipated by the conservatives.

The IFS added: “And these plans involve cuts to both investment spending and spending on unprotected public services.”

But while there is a commitment not to increase tax rates, taxes will increase due to the fiscal drag. Labor has previously said it will press ahead with the Conservatives’ planned freeze on income tax thresholds until 2028, dragging more of people’s income into taxes and pushing people into tax bands. higher. The IFS estimates this is equivalent to increasing income tax by 6p.

Companies: tax cap, VAT on school fees and increase in the minimum wage

For businesses, Labor will also cap corporation tax at the current level of 25 per cent and replace the business rates system to raise revenue “in a fairer way”, but did not provide specific details.

The Labor Party has also pledged to remove VAT and business rates exemptions on private schools, meaning parents could pay up to 20 per cent more in fees.

Starmer intends to pay for his ‘tax lock’ and public spending with changes to the non-dom regime, which allows foreigners living in the UK to avoid paying tax on their overseas income.

Like the Conservatives, the Labor Party said it will crack down on tax evasion and avoidance, raising around £5 billion a year.

Labor also says it will ensure the minimum wage is a “genuine” living wage.

It says: ‘We will change the mandate of the independent Low Pay Commission so that for the first time it takes into account the cost of living.

“The Labor Party will also remove discriminatory age bands so that all adults are entitled to the same minimum wage, which will mean a pay rise for hundreds of thousands of workers across the UK.”

Pensions: Bet on the triple block

The Labor Party has previously reiterated its commitment to the triple lock on state pensions, although it has not gone further to protect state pensions from income tax.

The Conservatives have committed to a ‘triple lock plus’ if re-elected, which promises the state pension will never be taxed.

In the manifesto, the Labor Party says: “We will also undertake a review of the pensions landscape to consider what additional steps are needed to improve pension outcomes and increase investment in UK markets.”

However, it has not committed to any specific review, but there is no mention of plans to restore the lifetime pension allowance in the manifesto.

The Government abolished the old £1.073 million lifetime allowance last year, but at the time the Labor Party said it would bring it back if elected.

Housing: affordable housing and mortgage guarantee system

The Labor Party says “the dream of home ownership is now out of reach for many young people” and has pledged to build 1.5 million homes in five years.

It says it will take action to ensure planning authorities are strengthened for development and support local authorities by funding additional planning officers.

It says it will take a “brownfield-first approach” and prioritize developing previously used land, before considering building on low-quality “grey belt” land.

The combined authorities will also be given new planning powers.

The Labor Party has also pledged to “deliver the biggest increase in social and affordable housing construction in a generation” with changes to the Affordable Housing Program to ensure more homes are built with existing funding.

For first-time buyers, the Labor Party says it will work with local authorities to give them the first opportunity to buy a home.

It also says it will introduce a mortgage guarantee scheme to help first-time buyers struggling to save for a deposit.