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Liberal Democrat manifesto: what does it mean for your finances?

New scheme would allow tenants to buy their rented homes

The Liberal Democrats today released their manifesto for next month’s general election, with property reforms and tax changes among the main pledges.

Here, we take a look at some of the key economic promises in the manifesto and explain how they could affect your finances.

Find out more: Read our breakdown of Labour’s manifesto and your finances.

Property: Rent to Own scheme and 300,000 new homes

The Liberal Democrat manifesto contains a series of property and housebuilding policies for both homebuyers and tenants.

Renting

The Liberal Democrats have proposed a new Rent to Own scheme, which would allow rent payments to build up like a mortgage until tenants own their own home after 30 years.

This would be funded by a new Housing and Infrastructure Development Bank.

They would also promote three-year tenancies with rent increases locked to inflation, and mandatory licensing for landlords.

A separate Help to Rent scheme would offer a government-backed tenancy deposit loan for first-time renters under the age of 30.

Find out more: Could a new app replace the six-week tenancy deposit?

Housebuilding

The Liberal Democrats say they will build up to 300,000 homes a year by 2020, with the government directly commissioning building programmes to create new homes to buy and rent.

This would include half a million affordable, energy efficient homes and at least 10 new garden cities.

What do the other parties say?

The Labour Party has already pledged to extend Help to Buy until 2027 and build over a million new homes, with at least half available for social rent.

The Conservatives are yet to release their manifesto, but have previously promised to build hundreds of thousands of new homes across a range of tenures.

Taxes: 1p would be added to income tax

The Liberal Democrats plan to bring in a 1p increase in income tax across the UK, to help raise £6bn towards the NHS.

Elsewhere, corporation tax would be restored to 20%, the married couples’ tax allowance would be scrapped, the public sector pay cap would be lifted and reverse recent cuts to capital gains tax.

The level inheritance tax (IHT) kicks in would also be lowered. The IHT allowance for individuals is currently £425,000 (if you are passing on your main home as part of your estate).

The Lib Dems have also proposed raising ‘the employee National Insurance threshold to the Income Tax threshold’ – effectively meaning that you would pay no National Insurance on anything you earned below the tax-free personal allowance. This currently sits at £11,500.

What do the other parties say?

The Conservatives are yet to announce their plans regarding taxation, including whether they would revisit plans to increase National Insurance contributions for self-employed people.

Labour, meanwhile, would increase income tax for the highest earning 5% of workers. This would come in the form of a 45p tax rate on earnings over £80,000 a year, and a 50p tax rate on earnings over £123,000.

Pensions: state pension triple lock guaranteed

The Liberal Democrats say they would protect the state pension triple lock. This would increase each year by 2.5%, earnings growth or pricing growth – whichever is higher.

The Liberal Democrats also say they would establish a review on introducing a single rate of tax relief for pensions, which would be ‘set more generously’ than the current basic rate relief of 20%.

What do the other parties say?

Labour says it would protect the triple lock at the same level as the Liberal Democrats, and the Scottish National Party has also pledged to keep the guarantee. The Conservatives are yet to confirm their plans for the triple lock.

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