Which political party will be best for your finances?
If you haven’t decided who to vote for you might want to look at what impact each party in power would have on your finances. But how well do you know the different parties’ policies?
Q: Which party is best for families or people planning a family?
If it stays in power, Labour will introduce a 'toddler tax credit' of £4 a week for families of one and two-year-olds. Labour would also extend the free nursery place scheme so three and four-year-olds also get 15 hours a week of free nursery education.
Meanwhile, both the Tories and Lib Dems would cut child trust fund payments.
The Tories would also cut tax credits to families with incomes over £50,000. However, they also plan to extend the right to request flexible working to every parent with a child under the age of 18 as well as introduce a new system of flexible parental leave which lets parents share maternity leave between them.
Q: What will happen to tax and national insurance under the different parties?
Labour has pledged not to increase income tax but it would keep the 50% income tax band for people earning more than £150,000. The Tories would keep the 50% rate for the time being.
Labour intends to increase NI contributions by 1% from next year for those earning more than £20,000. The Tories will raise contributions only for those earning more than £35,000.
The Lib Dems have promised a “tax overhaul”. This will include making the first £10,000 of earnings tax-free for low and middle-earners. The move, the party says, will take 3.4 low earners out of tax altogether.
Q: How will stamp duty and property taxes change after the election?
Labour announced in the Budget that it would increase the stamp duty threshold from £125,000 to £250,000 for first-time buyers for the next two years. There would also be a new 5% rate of stamp duty for property transactions over £1m from April 2011.
The Conservatives plan to cut stamp duty permanently for first-time buyers and make it easier for social tenants to buy homes.
The Liberal Democrats would introduce a 1% "mansion tax" on properties worth more than £2m.
If they came to power, the Tories say they will freeze council tax rates for two years while the Liberal Democrats would scrap council tax and replace it with a new tax based on people’s ability to pay.
Q: Are the three main parties planning to change the pension regime?
Yes, all the parties would make some changes to pensions. Labour plans to increase the state pension age incrementally between 2024 and 2046 to 68 for both men and women. They also want to reform the basic state pension so that more women who have brought up children or care for others can claim.
The Tories plan to bring forward the date at which the state pension age starts to rise to 66, from no earlier than 2016 for men and 2020 for women.
All three parties plan to reinstate the link between earnings and the state pension.
Q: What’s the Conservatives’ new Consumer Protection Agency all about?
The Tories plan to introduce a Consumer Protection Agency that would take over some of the consumer protection roles currently performed by the FSA and Office of Fair Trading. It would also define and ban excessive borrowing rates on store cards as well as give clearer information on credit card bills and advertising.
The Lib Dems’ manifesto also includes measures to ensure banks can't charge customers unfairly for going over their limit or bouncing a cheque. They would also cap interest rates charged by credit cards and store cards.
Q: Which party is best for students?
The Liberal Democrats seem to be the only party going after the student vote. They would scrap tuition fees for all students taking their first degrees saving them nearly £10,000 each.
However the Tories say they would create 10,000 extra university places in 2010 and aim to introduce an early repayment bonus on student loans.
A hugely unpopular tax paid on property and share purchases. Stamp duty on property is levied at 1% for purchases over £125,000 (£250,000 for first-time buyers) which then moves up at a tiered rate. For property between £125k and £250k you pay 1%, then 3% from £250k up to £500k and then 4% from £500k to £1m and then 5% for properties over £1m. But unlike income tax, which is “tiered” and different rates kick in at different levels, stamp duty is a “slab” tax where you pay the rate on the whole purchase price of the property. On shares, stamp duty is charged at a flat rate of 0.5% on all share purchases. Figures correct as of May 2011.
A scheme originally established in 1944 to provide protection against sickness and unemployment as well as helping fund the National Health Service (NHS) and state benefits. NI contributions are compulsory and based on a person’s earnings above a certain threshold. There are several classes of NI, but which one an individual pays depends on whether they are employed, self-employed, unemployed or an employer. Payment of Class 1 contributions by employees gives them entitlement to the basic state pension, the additional state pension, jobseeker’s allowance, employment and support allowance, maternity allowance and bereavement benefits. From April 2016, to qualify for the full state pension, individuals will need 35 years’ of NI contributions.
The Financial Services Authority is an independent non-governmental body, given a wide range of rule-making, investigatory and enforcement powers in order to meet its four statutory objectives: market confidence (maintaining confidence in the UK financial system), financial stability, consumer protection and the reduction of financial crime. The FSA receives no government funding and is funded entirely by the firms it regulates, but is accountable to the Treasury and, ultimately, parliament.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.