Martin Lewis discusses the impact Labor’s win will have on your personal finances

Martin Lewis shared his thoughts on the personal finance implications of Labour’s general election win. The founder of MoneySavingExpert.com appeared on ITV’s Good Morning Britain today to discuss the potential financial landscape following Labour’s decisive victory over the Tories, ending 14 years of Tory rule.

Sir Keir Starmer is due to take up residence in Downing Street later today (July 5) as the new Prime Minister. However, his triumph comes amid a cost-of-living crisis, with families across the country grappling with rising shop prices and escalating mortgage rates in recent years.

Martin began by suggesting that Labor will soon announce that the state of Britain’s finances is more dire than expected, reports the Mirror. He then predicted that any future changes would have to be financially feasible for the Government.

Martin said: “What I expect to happen in the next couple of weeks is that Labor will come fully into government and make some sort of revelation saying, ‘Wow, the finances are much worse than we expected, there is a big problem. economic black hole, things are going to be very tough,” and then do some expectation management.

“Of course, we all know that already… We’ve pushed candidates from all parties on what they’re going to do to fill the huge black hole in the nation’s finances. I think what this means for the cost of living is that the Government will look at things that don’t cost the exchequer a lot of money to do.

“They will need in the first 100 days to make a difference for the country, they will want to show people that things have changed, that it means action, that they will start delivering results. But they’re going to have to do it in a way that, if it hasn’t been announced in advance in the manifesto, it doesn’t cost.”

Martin confirmed that Labor has promised not to raise tax, but it’s important to remember that the threshold for when you start paying tax will remain frozen until 2028. This means more people will be drawn into paying tax when they start to earn more money, through salary increases or getting a better paying job.

The MSE founder said Labor could instead look at raising Capital Gains Tax to help plug the black hole, although this was not explicitly mentioned in the manifesto so we don’t know if this it will happen again. Capital gains tax is the tax levied on the profit made from the sale of an asset that has increased in value.

Martin stated: “They’ve said they’re not going to raise taxes, they’ve also said they’re not going to cut spending substantially, they’ve also said they’re not going to increase government borrowing and they’re not going to print money. i.e. all four hands tied behind the back It means that the only thing you have to fill that black hole is growth and it will be very hard to have growth at the level needed to fill it.

“I think the capital gains tax is, to some extent, probably right for a few percentage points up there. It is much cheaper to make profit than to make revenue. You’re taxed a lot less on the profit you make, on selling assets, than you are on making money.”

A key promise in the manifesto is a commitment to build 1.5 million homes over the next five years by reforming planning rules and developing low-quality areas in the green belt. Of this, Martin commented: “Let’s see if I can deliver that one.

“I’m also talking about finally banning Section 21 ‘no-fault’ evictions. There’s a huge power imbalance between landlords and tenants, and that needs to change – and I think it will.” holders.”

He went on to say: “Pensions have been talked about for a long time. They said they won’t change the lifetime allowance… so it’s the annual allowance that they can change, it’s a much more radical thing.

“They could cap pension tax relief so that everyone gets the same, the same tax relief as basic rate taxpayers. At the moment, higher rate taxpayers get more from the government in their pension because they pay more tax. I guess we won’t hear. a lot of that until September and we don’t really know.”