Planning for a Labour Government
Jessica Amodio
Partner
A common question in recent meetings has been whether we can expect further volatility in the markets should there be a change in political parties.
An October 2022 YouGov poll asked the general public who they would vote for in a general election held straight away. Labour received more than half of the public vote, while the Conservatives lagged behind on 23%.
When asked which issues would most determine how people would vote in a general election, the top answers were economy, healthcare, education, and immigration - regardless of whether they were Conservative or Labour supporters. This shows that priorities seem to be aligned within the UK public.
It is anticipated that there would not be a massive difference in the tax state which we currently find ourselves in. However, one of the key changes Labour has mentioned, is the intention to replace the non-dom status. This status was introduced under King George III in 1799 when Britain was fighting France. Labour said it would introduce a modern scheme for people who are ‘genuinely living in the UK for short periods to allow us to attract top international talent’. Tax advantages would likely expire after five years, compared with up to 15 years under the current system.
The other major issue which Labour is looking to ‘correct’ is the Lifetime Allowance. The Lifetime Allowance is a limit on how much money someone can build up in their pension savings without facing a tax charge. The limit was £1 million, but it will be completely abolished from April 2024. Labour has said it would reinstate the pensions Lifetime Allowance if elected.
Aside from this, Labour haven't pledged to change much else. The volatility in the UK markets would be the key issue for investors at that stage, and if a clear win is expected then this would most likely already be taken into account within the markets.
As ever, our advice would be to sit tight and weather the storm. The markets react strongly to shock events, but they have always recovered.
This article isn’t personal advice. If you’re not sure whether a course of action is right for you, ask for financial advice. All investments can fall as well as rise in value, so you could get back less than you invest.
