The Coalition have stressed that they plan to reduce the UK's deficit through spending cuts rather than tax rises. However, your finances will be affected one way or another. Find out how...
Finance focused policies dominated the first Coalition Agreement which set out initial details of how the Conservative and Liberal Democrats' pre-election promises will mesh together.
Further, more comprehensive information will be published in their final Coalition Agreement. This is likely to be made available ahead of the emergency budget which is expected before the end of June.
| Tax |
| Income tax |
- The income tax personal allowance will be raised to help 'lower and middle income earners'.
- A 'substantial increase' in the income tax threshold will be announced in April 2011.
- The income tax threshold will be increased to £10,000 as a 'longer term policy objective'. This will be achieved through an annual increase in personal allowances.
|
| National Insurance |
- Employee National Insurance contributions will increase by 1% in April 2011.
- There will be no increase in the National Insurance contributions for employers.
|
| Inheritance tax |
- The Conservative's proposed increase in the inheritance tax threshold has been put on hold.
|
| Married couples' tax |
- The Coalition have agreed to disagree on transferable tax allowances for married couples. The Conservaties will try and push through this change, however, the Lib Dems will not be required to support them.
|
| Capital gains tax |
- Non-business capital gains will rise so that they are taxed at a similar level to income (potentially close to 20% for those taxed at basic rate, 40% for higher rate tax payers and 50% for additional rate tax payers).
- Entrepreneurial business related capital gains will be subject to generous exemptions'.
|
| Child trust funds |
- Reductions will be made to Child Trust Fund contributions for children of higher earners.
|
| Tax credits |
- Reductions will be made in the level of tax credits paid to higher earners.
|
| Tax on flights |
- Air passenger duty will be replaced with a per-plane tax.
|
| |
|
| Homeowners |
| HIPs |
- HIPs (Home Information Packs) will no longer be required when you sell your property, though you will still need an energy performance certificate.
- Smart meters will be rolled out in homes across the UK.
|
| |
|
| Pensions |
| Retirement |
- Compulsory retirement at 65 will be phased out.
- A review will be held to establish when the state pension age will start to rise to 66; though it will not be before 2016 for men and 2020 for women.
|
| State pension |
- The link between average earnings and the basic state pension will be restored from April 2011.
- The state pension will then rise annually by the higher of the increase in average earnings, prices or 2.5%.
|
| Annities |
- The obligation to buy an annuity at 75 will be scrapped.
|
| Equitable Life |
- 'Fair and transparent payments' will be made to Equitable Life policy holders through an independent payment scheme.
|
| |
|
| Employment |
| Jobseekers |
- A single welfare to work scheme will be introduced to help all unemployed people return to work.
- The payment of benefits to those who are out of work but are able will become conditional on 'willingness to work'.
|
| |
|
| Banking |
| Reform |
- The Coalition are planning an extensive reform of the banking system.
- They will introduce a banking levy, 'tackle' bankers' bonuses and take steps to increase competition within the banking sector.
- The Bank of England will assume responsibility for the stability of the financial system as a whole and oversee the regulation and stability of individual financial institutions.
|
| Currency |
- The UK will not join the Euro as long as the Coalition retains power.
|
| |
|
