What does the election result mean for your money?

The new Government’s manifesto outlined a wide range of measures that could impact your personal finances. We have outlined some of the key points below.

Income Tax

The commitment not to raise Income Tax ‘on working people’ by holding current rates at 20%, 40% and 45% will be welcomed by many. However, there was no commitment to end the freeze on the thresholds from which you begin paying 40% Income Tax (£50,270) and 45% Income Tax (£125,140), which means more people will find themselves paying higher rates of tax as incomes increase.

Similarly, there was no mention of ending the ‘60% tax trap’ for those with income between £100,000 and £125,140, who see their tax-free personal allowance tapered away by £1 for every £2 of income over £100,000.

One way to mitigate the impact of higher tax bills on your earnings is to pay more into your pension, while Individual Savings Accounts (ISAs) continue to be a very effective way of shielding savings and investment income from tax.

Inheritance Tax

Although many had expected Inheritance Tax to feature as an election issue, none of the major political parties committed to review it in their manifestos. Both the main tax-free allowance of £325,000, which hasn’t changed since 2009, and the ‘Residence nil rate band’ of £175,000, are currently set to remain frozen until 2028. As property and asset prices rise, a growing number of families will find themselves caught in the Inheritance Tax net.

There are many ways to reduce any potential liability, but it’s important to take advice and plan early, as the earlier you plan the more options you have.


The Government confirmed their intention to maintain the State pension ‘Triple lock’, meaning the state pension will continue to increase each tax year by the higher of earnings, inflation or 2.5%.

They have also committed to ‘a review of the pension landscape’ with the aim of ‘improved pension outcomes’.

The manifesto didn’t refer to the reintroduction of the Lifetime Allowance that previously capped the amount of tax-advantaged pensions an individual can build up during their lifetime, which will be seen by many as a positive step, making it easier to plan for retirement. However, it will be important to keep an eye on any future reviews of pensions.

Pensions remain one of the most tax efficient ways to invest. In addition to tax relief on what you pay in, any growth is free of UK Income Tax and Capital Gains Tax. Anything left in your fund on death is normally free of Inheritance Tax.

Capital Gains Tax

The Government’s manifesto was silent on the topic of Capital Gains Tax. Currently it can be payable when you sell or gift chargeable assets, including shares or property, that has increased in value during the period you’ve owned it. It’s charged at a top rate of 20% (or 24% for residential property).

ISAs remain an effective way to protect investment gains from Capital Gains Tax.  

School fees

One of the Government’s headline commitments is to introduce VAT on private school fees. The manifesto was light on detail on how this will be implemented. Some took the view that paying fees in advance may be advantageous, however it’s possible that it may be charged when the service is delivered rather than when it’s paid for. If you’re planning on funding school fees in the future, it’s important to review your finances to ensure you remain on track.

The value of investments can fall and you may get back less than invested.

The tax treatment of pensions and ISAs depend on individual circumstances and may change in the future.

Inheritance Tax advice is not regulated by the Financial Conduct Authority or the Prudential Regulatory Authority.

NFU Mutual Financial Advisers advise on NFU Mutual products and selected products from specialist providers. When you contact us we'll explain the advice services we offer and the charges. Financial advice is provided by NFU Mutual Select Investments Limited.

Next steps

Plan for your retirement

Our Select Pension Plan is a personal pension that provides you with the choice and flexibility to decide where your money is invested, giving you control over your financial future.

Invest in an ISA

An ISA provides you with the ability to invest into a range of funds in a tax efficient environment with any growth free from UK Income Tax and Capital Gains Tax.

Financial advice the NFU Mutual Way

Our Financial Advisers are here to share NFU Mutual’s wealth of knowledge, answer your financial questions and bring clarity and focus to your goals.