In focus by topic A comparison of the political parties’ by topic
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Pension Triple Lock
Conservatives
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%.
Labour
Labour will maintain the pension triple lock. They have not committed to ensure that the personal tax free allowance for those of state pension age always exceeds the amount of the annual state pension, but have committed to freezing the personal tax allowance until 2028. The unavoidable implication of maintaining the pension triple lock while freezing the personal allowance for persons of state pension age is that even if the state pension only rises by 2.5% each year, by 2027/28 the annual value of the state pension will exceed the frozen personal tax allowance of £12,570 and pensioners whose only income is the state pension will have to pay income tax on a very small amount of their state pension.
Other parties
Green Party The Green Party does not support the pension triple lock. Its policy is that pensions will be uprated in line with inflation and keep pace with wage rises.
SNP
SNP policy is to maintain the triple lock and move towards delivering a “well-being pension”, which currently means increasing the state pension by 6.2% to £12,220 (£235 per week).
Other parties
The other parties' manifestos do not include policy commitments on this issue.
Taxation of pension contributions and withdrawals
Conservatives
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
Labour
The Labour Party has said that it will not introduce further taxes beyond those new taxes it has already introduced. Shadow Chancellor Rachel Reeves has said that she no longer advocates the reduction of tax relief on pension contributions made by higher and additional rate taxpayers.
Other parties
The other parties' manifestos do not include policy commitments on this issue.
Pension lifetime allowance (LTA)
Conservatives
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.
Labour
Despite previously promising to reinstate the LTA, Labour dropped this commitment shortly before publishing their manifesto. This decision may have been influenced by the complexity of reinstating the LTA (it took 2 years and 100s of legislative provisions to abolish it) and lobbying by the British Medical Association against reimposing it on doctors to avoid early retirements.
Other parties
The other parties' manifestos do not include policy commitments on this issue.
Inheritance Tax (IHT)
Conservatives
Despite the Chancellor calling IHT pernicious, the Conservatives have no plans to change IHT in their manifesto.
Labour
Labour has no plans to change IHT in their manifesto.
Other parties
Liberal Democrats The Liberal Democrats have no plans to change IHT in their manifesto. Reform UK Reform UK will exempt all estates worth under £2m from IHT. Green Party The Green Party plans to reform inheritance tax to ensure “that intergenerational transfers of wealth are taxed more fairly”.
Other parties
The other parties' manifestos do not include policy commitments on this issue.
Edinburgh and Mansion House Reforms
Conservatives
The Conservatives will complete the outstanding Edinburgh and Mansion House Reforms.
Labour
Labour will complete the outstanding Edinburgh Reforms. While they do not mention the Mansion House reforms specifically, it is implicit in their commitment to complete all in-flight regulatory reforms that they will. “In-flight” regulatory reforms, include the LTAF, financial promotion, regulation of cryptoassets, SDR and OFR, but in practice those regulatory reforms not yet fully developed may well be subject to change of emphasis and detail if implemented under a Labour government.
Other parties
The other parties' manifestos do not include policy commitments on this issue.
ISAs
Conservatives
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.
Labour
Labour announced a policy of promoting greater investment in UK securities through stocks and shares ISAs prior to the Conservatives announcing the British ISA. The British ISA policy is consistent with that aim and accordingly Labour have adopted it. However, with the legislation not yet drafted, it is likely that the emphasis will change to reflect Labour’s concerns. Labour’s Tibi scheme policy (see below) includes an investment selection mechanism which could easily be repurposed to include selection of approved investments for the British ISA.
Other parties
SNP
SNP policy is to reintroduce a simplified Help to Buy ISA for first time buyers.
Other parties
The other parties' manifestos do not include policy commitments on this issue.
Pension fund consolidation
Conservatives
The Conservatives will continue the current policy aim of pension fund consolidation.
Labour
Labour will continue the current policy aim of pension fund consolidation.
Other parties
The other parties' manifestos do not include policy commitments on this issue.
Regulating financial services to encourage climate-friendly investments
Conservatives
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.
Labour
The Labour Party will require UK-regulated financial institutions – including banks, asset managers, pension funds, and insurers – and FTSE 100 companies to develop and implement credible transition plans that align with the 1.5°C goal of the Paris agreement. This would appear to be substantially the same as existing government policy.
Other parties
Liberal Democrats In particular the Liberal Democrats want to require “pension funds and managers to show that their portfolio investments are consistent with the Paris agreement”. Depending on the detail, a policy of this nature may require pension funds to divest from all assets that are not Paris agreement aligned, including investments in transitioning and impact assets, which could both cause losses to beneficiaries and be counterproductive in relation to achieving Paris agreement goals.
Green Party Green Party policy is to require non-bank financial institutions including pension funds, investment funds, mutual funds, brokers and insurance companies that sell policies in the UK, to divest from fossil fuel assets by 2030.
Other parties
The other parties' manifestos do not include policy commitments on this issue.
Getting pension schemes to invest into the UK shares and assets
Conservatives
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”.
Labour
Labour plans to create a voluntary scheme under which DC pension funds allocate a proportion of their capital to investing in funds that have been approved by the Government and invest in UK based venture capital, small cap growth equity, and infrastructure investment. This is known as a Tibi scheme after a French policy of that name which encourages pension scheme investment into French assets. Under the French scheme that inspired this policy, the equivalent of DC funds are asked to set aside 5% of their capital, although Labour have not yet set a figure. While Labour’s Tibi scheme has substantially the same aim as existing government policy, the regulatory framework by which is seeks to achieve this aim is more involved and complex.
Other parties
The other parties' manifestos do not include policy commitments on this issue.
Allocation of funds freed up by Solvency II reforms
Conservatives
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.
Labour
Labour wants the funds freed up by Solvency II reforms to be invested in the UK’s energy distribution infrastructure. This is such a specific aim that it seems likely that there will need to be some form of regulatory compulsion to do so. Labour’s plan for financial services is explicit that participation in the Tibi scheme is voluntary. There is no equivalent statement that insurers’ participation in financing energy distribution infrastructure will be voluntary, so the implication is that it will be compulsory.
Other parties
The other parties' manifestos do not include policy commitments on this issue.
Directing private capital into infrastructure
Conservatives
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.
Labour
Labour have spoken about getting private capital to finance their infrastructure plans. It is unclear how they will do this, but as with their plans to have insurers fund investment in energy distribution infrastructure, there is a question as to whether this may require regulatory compulsion.
Other parties
Green Party Green Party policy is to make financial services a force for good and direct finance towards the businesses that are critical to creating a better future for all.
Other parties
The other parties' manifestos do not include policy commitments on this issue.
Local government pension schemes
Conservatives
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).
Labour
Labour plans to “set out best practice for adopting similar, cost-effective in-house fund management capabilities within pools to deliver better returns for savers and create new jobs in regions and nations.” With the exception of the additional objective of creating new jobs in the regions and nations, that appears to be substantially the same as existing government policy.
Other parties
The other parties' manifestos do not include policy commitments on this issue.
Disposal of remaining taxpayer stake in NatWest
Conservatives
The Conservatives will offer the remaining taxpayer owned NatWest shares to the public in the style of the privatisations of the 1980s.
Labour
Labour does not favour offering NatWest shares to the public.
Other parties
The other parties' manifestos do not include policy commitments on this issue.
Financial services regulators1
Conservatives
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.
Labour
The Labour Party promises to ensure a pro-innovation regulatory framework for financial services. The Labour Party wants to review the remits of the various financial services regulators to ensure that there are no gaps or overlaps. They have promised a streamlining review of the FCA Handbook in light of the advent of the Consumer Duty, which they think means some rules can be removed or simplified. Labour want to introduce metrics to measure how the FCA and PRA are meeting their secondary competitiveness objective.
Other parties
Liberal Democrats The Liberal Democrats want to introduce a national financial inclusion strategy and require both the Financial Conduct Authority and the Prudential Regulation Authority to have regard to financial inclusion. This would include protecting access to cash, supporting banking hubs, expanding access to bank accounts, supporting vulnerable customers and introducing Sharia-compliant student finance.
With the exception of Sharia-compliant student finance and the formalisation of existing financial inclusion policy, all these initiatives are already government policy in some fashion.
Other parties
The other parties' manifestos do not include policy commitments on this issue.
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
Conservatives have no plans for a sovereign wealth fund.
Labour
Labour plans a national wealth fund to be capitalised with £7.3bn, however, it is unclear where that funding will come from. Typically sovereign wealth funds are funded from taxes on fossil fuel industries, however, the UK oil and gas industry is already heavily taxed with permanent windfall taxes and Labour is committed to issuing no further oil and gas licences. The fund will have a target of attracting three pounds of private capital for every one pound of taxpayer funds committed. The national wealth fund will invest in ports, car factories, steel production, carbon capture and green hydrogen projects.
Other parties
The other parties' manifestos do not include policy commitments on this issue.
Taxation of carried interest
Conservatives
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.
Labour
Labour plan to tax carried interest as income, which is currently taxed at 45% for additional rate taxpayers. “Private equity is the only industry where performance-related pay is treated as capital gains. Labour will close this loophole.” Labour believes that this policy will raise an additional £565m in tax revenue. Labour have matched the Conservative promises not to increase the rates of capital gains tax or income tax.
Other parties
Green Party Green Party policy is to tax investment income at the same rate as earned income, which implies that carried interest would be subject to income tax and national insurance. The Green Party wants to scrap the upper earnings limit for national insurance, which would increase NI on higher rate and additional rate earnings from 2% to 8%, to give a combined marginal tax rate on earned income of 53%.
It is also Green Party policy to raise the rates of capital gains tax to match income tax rates, so even if carried interest were to be treated as a capital gain, it would still be taxed at a marginal rate of 45%. Plaid Cymru Plaid Cymru policy is to equalise capital gains tax rates with income tax, which would effectively increase the marginal rate of tax on carried interest currently taxable as a capital gain from 28% to 45%.
Other parties
The other parties' manifestos do not include policy commitments on this issue.
Corporation Tax
Conservatives
The Conservatives have promised not to further increase corporation tax.
Labour
Labour have promised to keep corporation tax at 25% for the length of the next Parliament.
Other parties
The other parties' manifestos do not include policy commitments on this issue.
Personal Tax
Conservatives
The Conservatives have promised not to increase income tax, national insurance, capital gains tax or VAT.
Labour
Labour have also promised not to increase income tax, national insurance, capital gains tax or VAT on working people. The qualification that taxes will not be raised on working people has led commentators to speculate as to whether Labour will raise taxes on the income of pensioners and on “unearned income”, eg income from investments or property. Labour says that it has no plans to do so.
Other parties
SNP
SNP policy is to seek full devolution of powers to set income tax and national insurance in order to create a progressive system of taxation of income. With the limited powers that Scotland currently has over income tax, the SNP have created what they consider to be “the fairest and most progressive income tax system in the UK”, which has a higher personal allowance and a lower starting rate of tax than the rest of the UK, but also has lower thresholds at which higher and additional rates of tax are paid and a higher rate of higher tax.
Plaid Cymru
Plaid Cymru policy is for powers to set income tax bands and thresholds as well as capital gains tax should be developed to the Senedd (Welsh Assembly). If those powers were so devolved, Plaid Cymru would use them to create a system that fits Wales’s circumstances, which would include equalising the rates of income tax and capital gains tax.
Other parties
The other parties' manifestos do not include policy commitments on this issue.
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