Change of Government: What Happens Next With Respect to My Finances?

The recent UK election has brought a new government into power, leading many to question the future of their finances. With potential changes on the horizon, it’s essential to understand what might happen next. Here’s a breakdown of key areas to watch, especially those that directly impact your financial planning.

Capital Gains Tax: Expect Changes?

Capital Gains Tax (CGT) could be a focal point for the new government as they look for ways to increase revenue. Any changes to CGT can significantly affect investments, property sales, and overall financial planning. Investors should stay informed about possible reforms and seek advice on tax-efficient strategies to mitigate any negative impacts.

What Remains Unchanged: Government Priorities

While some areas might see changes, the new government has made clear commitments on what will remain untouched. According to the Labour Party, they “will not increase income tax, national insurance or VAT. Unlike the Tories, we have been clear about how we will pay for our first steps in government: by making the tax system fairer. Ending tax breaks for private schools, which exempt them from VAT and business rates” source.

Furthermore, there’s reassurance regarding pension plans. Labour has confirmed that they won’t abolish the tax-free pension lump sum after some confusion during a radio interview source. These commitments provide some stability amidst potential shifts in other areas. The improvements to pensions’ rules in 2024 still make them a cornerstone of a solid financial plan.

Government’s Focus: What’s on the Agenda?

While the new administration might not be increasing major taxes, they have other priorities that could influence financial planning. Ensuring fairness in the tax system and possibly targeting specific tax breaks are high on their agenda. This approach may lead to adjustments that affect various sectors and individuals differently.

Preparing for the Future

Given the potential for significant changes in areas like CGT and the clear stance on others, staying proactive is crucial. Regular consultations with a financial adviser can help you adapt your strategies to align with new policies and ensure your financial plans remain robust. There are ways of legitimately deferring or avoiding taxes altogether, and there are still reasons why investing in such a way to make gains, and pay CGT, is desirable.

Stay Alert and Informed

The political landscape is always shifting, and staying updated on policy changes can help you navigate the uncertainties. Whether it’s adapting to new tax regulations or understanding the implications of what remains unchanged, being informed will be your best asset in securing your financial future.

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