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What advisers must know about Tory manifesto

What advisers must know about Tory manifesto

It is 84 pages long and packed with rhetoric on everything from defence spending to free breakfasts for children, but what is there for financial advisers to take away from the Conservative party general election manifesto?

Here is a rundown of the main points that will affect people’s money and financial wellbeing:

Tax

Prime minister Theresa May recommitted to raising the personal allowance for tax to £12,500 and the higher rate to £50,000 by 2020.

She said she will not raise VAT, but hasn’t ruled out rises to income tax or national insurance.

She also recommitted to ensuring that local residents can vote against council tax rises via a referendum.

Pensions

Under Conservative party plans, the state pension triple lock would go. This lock ensures pensioner income rises by whichever is the higher of inflation, average earnings of 2.5 per cent each year.

This would be replaced by a double lock in 2020, meaning that the state pension will increase by the average of earnings or inflation, but a 2.5 per cent uplift is not guaranteed.

The Pension Regulator will be give new powers to step in and issue fines when companies neglect their pension funding responsibilities. As well as fines, the regulator will be able to disqualify directors who “wilfully leave their pension schemes underfunded”.

Jon Greer, head of retirement policy at Old Mutual Wealth, said: “The Conservatives have taken a bold step in committing to replace the triple lock. The main issue with the triple lock is that it guarantees the state pension will rise by 2.5 per cent no matter what.

"The double lock removes this ratchet effect however, the state pension will still rise faster than both earnings and prices in the long run, because of inflation, according to projections from the Office for Budget Responsibility."

Benefits

The Winter Fuel Allowance will be means tested, with the money from the change used to fund social and health care.

However, pensioners will keep their free bus passes, eye tests and all other perks.

Free school meals for all infants will be scrapped, replaced by free breakfasts for all primary school children.

Social care

The threshold for free social care will increase from £23,250 to £100,000. However, the value of a property will be included in the calculation for people who need care in their own homes.

However, those in care will be able to keep their homes until after they die, when the home will be sold to recover the costs, with £100,000 passed on to loved ones, guaranteed.

Stephen Lowe, director at specialist financial services company Just, said this could lead to a ‘catastrophic loss of assets’.

“For the majority of middle England this policy will mean crossing their fingers and hoping for the best,” he said.

Consumer Rights

The manifesto promises to crack down on unfair leasehold practices, such as escalating ground rents, and increase security for tenants.

The Conservatives will consider a ban on cold-calling customers concerning personal injury claims.