Will you pay less tax under a Tory government?

How will a Tory majority government affect your money?

Updated: 
Tax time

The shock Conservative election win has left us all reeling, markets are up, business leaders are smiling and if you're a higher rate taxpayer or homeowner you may be smiling too.

We were all gearing up for another hung parliament and wondering just what deals would have to be made and policies compromised in order to settle on a coalition.

But by early this morning it was clear there was going to be no need for cross-party talks as the Tories snuck in a majority government, which absolutely no one predicted.

The drubbing Labour took in Scotland and the Lib Dems took, well, everywhere pushed David Cameron into power for another five years.

So what tax treats will he bring with him? The answer is not too many but the ones he offered up in his manifesto were very tasty. As well as refusing to increase the rate of VAT, national insurance and income tax, he is planning to let you keep more of your money in your pocket in life and your assets in your family when you die.

The major tax policy that the Conservatives offered in their manifesto is a new inheritance tax (IHT) threshold that will stop family homes up to £1 million being subject to the death tax.

The policy isn't as straightforward as offering a higher 'nil rate band', the amount of estate that can pass on free of 40% IHT and currently stands at £325,000.

A couple has a joint nil rate band of £650,000 meaning a home can pass on to children on the death of the second death tax-free. A 'family home allowance' of £175,000 per person will be added to the nil rate band, meaning a couple will be able to pass a family home worth £1 million on to their family IHT-free.

Your income

This big ticket policy is followed up by allowing people to keep more of their hard-earned cash and increasing the threshold at which you pay 40% income tax to £50,000 and the personal allowance will also rise to £12,500 (although let's not mention that the latter is a Lib Dem policy).

Positioning itself as the party of hardworking people has proved a stroke of genius for the Tories in this election and they are expected to clampdown further on tax avoidance and evasion, which no one is going to grumble about.

And while the Tories have rejected a mansion tax, there is a chance that a reform of the council tax bands could bring in a stealth mansion tax to squeeze the rich a bit more.

A shock election, and shock-horror; tax policies that seem to benefit the majority. But let's not speak too soon and check that detail for devils when it come in.

Read more:
What the Conservative win means for your money
Pensioner puts £30,000 on a Conservative election victory
Are elections bad for our economy?

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