Home Money What the Liberal Democrat manifesto means for your finances: free personal care, CGT rises and increased spending

What the Liberal Democrat manifesto means for your finances: free personal care, CGT rises and increased spending

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Daveynomics: Liberal Democrat leader Ed Davey calls for a series of changes to personal finances in the party's manifesto, 'For a Fair Deal', ranging from more electric vehicles to better pensions

The Liberal Democrats have published their 2024 manifesto and although the party is highly unlikely to come to power, its monetary policies could still end up influencing those of the more powerful parties.

The Liberal Democrats are currently in fourth place in the polls with 10 percent of the vote, behind Labour, the Conservatives and the Reformists.

But the party, led by Ed Davey, has a dramatic policy manifesto which, if carried out, would shake up investment, savings, welfare and taxes.

Below are all the main points you need to know about what Liberal Democrat policies would mean for your money.

> What the Conservative manifesto means for your money

Daveynomics: Liberal Democrat leader Ed Davey calls for a series of changes to personal finances in the party’s manifesto, ‘For a Fair Deal’, ranging from more electric vehicles to better pensions

CGT increases spending on the NHS

The Liberal Democrats say they would spend around £27 billion more a year by 2029, partly funded by taxes on banks and also by an increase in capital gains tax.

This CGT increase would mean an extra £5.2bn a year to spend on the NHS, the Liberal Democrats claim.

The party would charge CGT 20 per cent for profits up to £50,000, 40 per cent for profits between £50,000 and £100,000 and 45 per cent for profits over £100,000.

This would align CGT with income tax rates, but would be based solely on capital gains, rather than the current system of adding capital gains and income to calculate CGT, the Liberal Democrats say.

At the moment, CGT is 24 per cent on residential property gains and 20 per cent on everything else for higher or additional rate taxpayers.

For basic rate taxpayers, the CGT rate is 18 per cent on residential properties and 10 per cent on other earnings.

But capital gains are added to other income to decide the rate, which could take many out of the base rate band of £12,571 to £50,270.

The Liberal Democrats also want to increase the CGT allowance from £3,000 to £5,000.

Capital gains tax relief stood at £12,300 before Conservative chancellor Jeremy Hunt reduced it to £3,000 over the last year and a half.

The Liberal Democrats want to increase the personal allowance “when public finances allow”, which is what can be earned before paying income tax.

This is currently set at £12,570 for the 2024/25 financial year.

Paul Johnson, director of the Institute for Fiscal Studies (IFS) think tank, said: “While there are some welcome changes – their capital gains tax reform proposal appears to be going in a sensible direction – at least some of the measures are a Bad idea economically.

‘In particular, there is no economic justification for a tax on share buybacks (explained below). It would distort companies’ financing decisions and further discourage the use of equity financing compared to debt financing.’

The triple blockage of pensions persists and the chaos in top-ups is the focus of attention

The party has promised to maintain the triple lock on state pensions – a promise that the state pension will always rise according to the highest inflation, 2.5 per cent, or average income growth.

The Liberal Democrats said they want to end the gender gap in private pensions and end the scandal over missing state pension top-up payments, first revealed by This is Money.

Share buyback tax for investors

The Liberal Democrats want to introduce a 4 per cent tax on FTSE 100 buybacks, where companies buy their own shares from investors.

Buybacks are a way of returning cash to investors, as an alternative to split payouts, and are attractive to directors as they increase earnings per share and can inflate share prices.

Energy bills in the spotlight

The Liberal Democrats want to reduce energy bills by launching a home energy improvement programme, with free insulation and heat pumps for low-income households.

They would also promote heat pump installations with greater cash incentives for installing them.

The party would introduce a social energy tariff, which would lower energy bills for the most vulnerable households.

He also wants discounts on energy bills to be paid for by a one-time windfall tax on oil and gas producers and traders.

More social housing

The Liberal Democrats said they would ensure 380,000 new homes were built a year, of which at least 150,000 would be social housing.

By comparison, the current Conservative government has a housing target of 300,000 new homes a year, but only built 234,000 in 2022/23.

Matt Downie, chief executive of homelessness charity Crisis, said: “This is a promising set of proposals to tackle the housing and homelessness crisis.” It is very welcome to see the ambitions of a cross-government plan to end all forms of homelessness, alongside a major social housing program and the scrapping of the archaic Vagrancy Act.’

free personal care

The Liberal Democrat manifesto said the party would introduce free personal care in England to help the elderly and disabled.

Funding for care is set by each of the countries in the United Kingdom, so the Liberal Democrats were only able to change the policy in England itself.

At the moment, healthcare in England is means-tested and councils typically only step in to help if you have savings of less than £23,250.

> Read our guide to the Lib Dems self-care plan

VAT reduction on public charging of electric vehicles

The Liberal Democrats will make life easier for electric vehicle drivers by installing more charging points and reducing VAT on public charging to 5 percent.

The party also said it would “protect motorists from scams, including unfair insurance and petrol prices”, but did not elaborate.

The Liberal Democrats also promise to ensure that all new cars and small vans have zero emissions from 2030.

Universal Credit Reform

The Liberal Democrats have several plans to reform different areas of the care system, including:

  • Remove the two-child limit and Universal Credit benefit limit
  • Reduce waiting time for first Universal Credit payment from five weeks to five days
  • Make sure benefits are generous enough to pay for essential needs, such as food.
  • Increase carer’s allowance by adding £20 per week to the current maximum of £81.90.
  • Scrapping the ‘bedroom tax’ which reduces tenants’ housing benefit if a property has too many vacant bedrooms

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