With an election imminent in the UK, it is natural to ask whether you should make any changes to your investments to reflect the likely outcome.
Labour’s lead over the Conservatives has remained at around 20% for most of the last 18 months, so financial markets are probably already assuming a Labour victory on 4 July.
In a speech on 28 May, Shadow Chancellor Rachel Reeves said that there would be no increase in taxes beyond those already announced. (Primarily, these are an increase in the windfall tax on energy company profits and the addition of VAT to private school fees.)
If Labour win, Capital Gains Tax, Income Tax, National Insurance and Corporation Tax would not be increased.
A budget would not be expected until the autumn, because the Office of Budget Responsibility would first conduct an independent review of Labour’s plans. This should give investors time to consider their options.
Reeves stressed that Labour’s approach had shifted to one of fiscal responsibility and a pro-business stance. In fact, over 120 top business leaders recently signed a letter to The Times supporting a change to a Labour government.
One area of uncertainty is the Pension Lifetime Allowance (LTA), which Chancellor Jeremy Hunt removed from April 2024. The LTA limited the amount that someone could build up in pension schemes while receiving tax relief. Labour have said they would reinstate it, but not how. Their manifesto, due to be released soon, may clarify this.
Hartey Wealth Management offers investment advice in Cheshire and Shropshire and would be pleased to discuss how the election result might impact your investment portfolio.
