Conservatives

Key policies

Pension Triple Lock

The Conservatives will maintain the pension triple lock and in addition ensure that the personal tax free allowance for those of state pension age always exceeds the amount of the annual state pension (a measure they refer to as “triple lock plus”). The triple lock is a guarantee that the state pension will increase by the greater of inflation, wages growth and 2.5%.

Taxation of pension contributions and withdrawals

The Conservatives will introduce a new Pension Tax Guarantee:

no new taxes on pensions
maintain tax relief on pension contributions at their marginal rate
no extension of National Insurance to employer pension contributions
maintain the 25% tax free lump sum on taking a pension

Pension lifetime allowance (LTA)

The Conservatives abolished the lifetime allowance cap on the amount that can be saved tax free into a pension fund, in part due to concerns that the way it interacted with public sector final salary pension schemes was causing senior public sector employees, particularly doctors, to take early retirement.

Inheritance Tax (IHT)

Despite the Chancellor calling IHT pernicious, the Conservatives have no plans to change IHT in their manifesto.

Edinburgh and Mansion House Reforms

The Conservatives will complete the outstanding Edinburgh and Mansion House Reforms.

ISAs

The Conservatives have announced plans to introduce an additional £5,000 British ISA allowance (on top of the existing £20,000 stocks and shares ISA allowance) to be invested into British securities and funds, although detail on how those would be selected has not yet been set out. The plan requires legislation which cannot be introduced until after the election.

Pension fund consolidation

The Conservatives will continue the current policy aim of pension fund consolidation.

Regulating financial services to encourage climate-friendly investments

The Conservatives will continue the current policy aim of encouraging financial services firms to develop climate-friendly products and make climate-friendly investments in support of the government’s net zero policy. This includes requiring financial services and other companies to develop transition plans to make their businesses carbon neutral.

Getting pension schemes to invest into the UK shares and assets

Under the Mansion House reforms Conservatives have been encouraging the biggest DC pension schemes to commit to investing 5% of their default funds into unlisted UK equities by 2030. 11 pension schemes have signed up to date. While currently a voluntary programme, in the March 2024 budget the Chancellor of the Exchequer warned that if UK pension funds did not allocate more investment to UK equities he would take unspecified “further action”.

Allocation of funds freed up by Solvency II reforms

The Conservatives seek to encourage insurers to invest the funds freed up by its Solvency II reforms into UK infrastructure and other UK illiquid assets.

Directing private capital into infrastructure

The Conservative’s policy is to encourage the investment of private capital into infrastructure and illiquid assets by reforms to make this easier and more attractive, eg via the Long Term Asset Fund.

Local government pension schemes

The Conservatives have no specific plans to issue further guidance to LGPS, although the Chancellor announced at Mansion House an ambition for LGPS funds to invest up to 10% in private equity (thereby unlocking £25bn by 2030) and to accelerate the consolidation of investments through further pooling (creating pools of at least £50bn by March 2025).

Disposal of remaining taxpayer stake in NatWest

The Conservatives will offer the remaining taxpayer owned NatWest shares to the public in the style of the privatisations of the 1980s.

Financial services regulators1

Conservative ministers are somewhat unhappy with how the FCA is exercising its secondary competitiveness objective in respect of its proposals to name and shame firms under investigation. This may lead to a reassessment of the extent of and mechanisms for ministerial and Parliamentary oversight should the Conservatives be returned to office.

1 Note that there are all party parliamentary committees in both the Commons and Lords that are unhappy with how the FCA is exercising its secondary competitiveness objective. Although the election may change the composition of the Commons committee, it is likely that there will continue to be Parliamentary interest in how the FCA exercises its secondary duty regardless of the result of the election.

Sovereign wealth fund

Conservatives have no plans for a sovereign wealth fund.

Taxation of carried interest

The Conservatives intend to continue treat some carried interest as capital gains (the amount depends on the particular facts), with the applicable rate being 28% for higher and additional rate taxpayers. The Conservatives have promised not to increase the rates of capital gains tax or income tax.

Corporation Tax

The Conservatives have promised not to further increase corporation tax.

Personal Tax

The Conservatives have promised not to increase income tax, national insurance, capital gains tax or VAT.

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