How will the election affect your personal finances?

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By Luke Jovetic
Know Your Money Editor

Consumers might find themselves increasingly considering how their personal finances might be affected by this year's general election - which takes place on May 6th.

With the impact of the recession still being felt by many people in the UK, voters may take a little more interest than usual in how each party's policies would affect the money they have to spend.

One hot topic of discussion is Labour's plans to increase National Insurance by one pence. It states this will not take place until next year, once growth is firmly established. No-one earning under £20,000, or pensioners, will pay more.

Party manifestos can prove to be a difficult document to skim through, so we've highlighted some of the issues that could be relevant to your money.

Debt

Labour plans to give everyone the right to a basic bank account in an attempt to ensure that no one is excluded.

It also promises that winter fuel payments will remain at the higher rate of £250 - and £400 for those over the age of 80 - for another year.

Plans are also in place to continue the Homeowners' Mortgage Support scheme to allow people in financial difficulty to defer mortgage payments if required.

The Conservatives plan to put a halt to excessive interest rates on store cards and ensure that people are better informed about credit card bills.

It also plans to introduce a new entitlement for the installation of up to £6,500 worth of energy-efficiency measures to be introduced in each household, as well as protecting the winter fuel payment.

Plans are also in place to launch Britain's first free financial advice service funded by a levy on the financial services sector.

The Liberal Democrats plan to introduce a maximum interest rate for credit cards and stop people from paying income tax until they earn £10,000.

Students doing their first degree would not be required to pay tuition fees, saving them almost £10,000.

Property

Labour has plans for a new five per cent rate of stamp duty for property deals worth more than one million pounds to fund the current two-year stamp-duty break for first-time buyers on residential property transactions up to £250,000.

It would also build 10,000 new affordable homes in the next two years.

The Conservatives plan to uphold the abolition of stamp duty for first-time buyers on homes up to £250,000.

It would set up new local housing trusts with communities to build affordable new homes.

The Liberal Democrats also plan to build tens of thousands of affordable houses to rent so that no one is left without a home.

Children

Labour plans to increase the child element of the Child Tax Credit by four pounds per week from April 2012 for families with children aged one and two.

It would also make additional annual payments of £100 into the Child Trust Fund accounts of disabled children and £200 per year for those who are severely disabled.

The Conservatives plan to stop paying tax credits to households with incomes over £50,000 by means-testing the family element of the Child Tax Credit at a lower threshold.

It plans to abolish Child Trust Funds for all but the poorest one-third of families and disabled children.

The Liberal Democrats plan to fix the payments of tax credits for six months at a time "so payments are stable and predictable for families".

It states that Child Trust Funds would be abolished and money spent elsewhere.

What the experts say

Ed Bowsher, head of consumer finance at lovemoney.com, said: "Labour is planning to increase the tax in April 2011, but the Tories won't increase it for most people.

"The Tories also plan to recognise marriage in income tax, but even the most fortunate couples will only get an extra £150 a year."

He added it is "pretty clear" the Conservatives will put more emphasis on cutting government spending than Labour will, while in turn they are more likely to focus more on tax rises. So those who find tax to be a top concern may prefer to vote Tory.

Important Notice
This guide is intended for general information only and is not intended as, and does not constitute, any form of advice, recommendation or endorsement by us of any particular product(s) or services and you should rely on your own further research and professional advice in relation to your specific requirements and circumstances before purchasing any products or services. Use of this guide is subject to the Terms of Use of the KnowYourMoney site.