Brexit means Brexit was the mantra of the Prime Minister and the reasoning behind the failed attempt at the Government increasing their majority through a snap general election enabling a stronger and stabler position for negotiating Brexit.
The outcome of the election is hung parliament and a Conservative government hanging onto power with the Brexit negotiations approaching. In the run-up to the election many believed that Prime Minister May was about to remove uncertainty and increase her negotiating hand. Now, with the Tories relying on the DUP to prop them up the opposite is true.
The uncertainty lies with which elements of their manifesto they will be able to deliver with such a relatively slim parliamentary majority. If the DUP support them, this gives them the advantage for UK wide politics, but for England only votes, they cannot contribute.
One of the major differences in the Labour and Conservative manifestos was the different tax impacts, around a £10 billion increase versus £50 billion had Labour gained a majority. Considering what could have happened, the result leaves the prospect that there is £40 billion less burden albeit with a likely continued austerity drive meaning less for public services.
The Tory manifesto suggests not a lot will change from the pre-election plans, the former chancellor’s plans to raise the personal allowance to £12,500 and the higher rate threshold to £50,000 should still stand. Corporation tax too should continue to fall under the Tories, reaching 17% by 2020.
Other elements we can expect based upon the manifesto are that until 2020 there will likely be a freeze on most working-age-benefits and local housing allowance rates.
In addition, there could be a continuation of the transitioning from the disability allowance to personal independence payments a council tax precept increase in 2018; the abolition of class 2 national insurance; a limitation of the child element of tax credits and universal credits to two children; and support for mortgage interest payments to be shifted from a benefit to a loan.
With the continuation of austerity and the cap in public sector wage rises at 1% likely to continue the gap between public and private sector levels of pay will only continue to grow. There is already discontent amongst those affected, and should this carry on indefinitely there is the potential for a backlash eventually. It is certainly something to look out for.
What is for certain is that we can look forward to a reduced public sector and lower rates of tax than would otherwise have been the case had the election resulted in a Labour majority.
For sound financial advice, whether you want to find out more about managing auto-enrolment pensions, filing your tax return or your organising your business finances for small local company, Newton Magnus remain a consistent, reliable firm in an otherwise uncertain world!
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