What the Lib Dem manifesto means to your cash

The Liberal Democrats have published their 2024 manifesto – and although the party is very unlikely make it into power, their money policies could still end up influencing those of the more powerful parties.

The Lib Dems are currently polling fourth in the polls at 10 per cent of the vote, behind Labour, the Conservatives and Reform.

But the party, led by Ed Davey, has dramatic manifesto policies that would shake up investing, saving, social care and tax if carried out. 

Here are all the main points you need to know about what Lib Dem policies would mean for your money.

> What the Conservative manifesto means for your money 

CGT rise to spend on the NHS

The Lib Dems say they would spend around £27billion more a year by 2029, funded partly by levies on banks and also a rise in capital gains tax. 

This CGT rise would be mean an extra £5.2billion per year to spend on the NHS, the Lib Dems claim.

The party would charge CGT at 20 per cent for gains up to £50,000, 40 per cent on gains between £50,000 and £100,00 and 45 per cent for gains over £100,000.

This would bring CGT in line with income tax rates, but it would be based solely on capital gains, instead of the current system of adding capital gains and income together to work out CGT, the Lib Dems say.

At the moment, CGT is 24 per cent on gains from residential property and 20 per cent on everything else for higher or additional rate taxpayers.

For basic rate taxpayers the CGT rate is 18 per cent on residential property and 10 per cent on other gains.

But capital gains are added to other income to decide the rate, potentially pushing many out of the £12,571 to £50,270 basic rate band.

The Liberal Democrats also want to raise the CGT allowance from £3,000 to £5,000.

The capital gains tax allowance stood at £12,300 before Tory Chancellor Jeremy Hunt hacked it back to £3,000 over the past year-and-a-half. 

The Lib Dems want to raise the personal allowance ‘when the public finances allow’, which is how much you can earn before paying income tax.

This is currently set at £12,570 for the 2024/25 tax year.

Paul Johnson, director of the Institute for Fiscal Studies (IFS) think tank, said: ‘While there are some changes to be welcomed – their proposed capital gains tax reform looks to be in a sensible direction – at least some of the measures are a bad idea economically. 

‘Most notably, there is no economic rationale for a tax on share buybacks [explained below]. It would distort companies’ financing decisions and further discourage the use of equity finance relative to debt finance.’

Pension triple lock remains and top-up chaos in focus

The party has promised to keep the state pension triple lock – the promise that the state pension will always rise by the highest of inflation, 2.5 per cent or average earnings growth.

The Liberal Democrats said they want to end the gender pension gap for private pensions, and end the scandal of lost state pension top-up payments, first revealed by This is Money.

Share buyback tax for investors

The Liberal Democrats want to introduce a 4 per cent tax on FTSE 100 buybacks – where companies purchase their own shares back from investors.

Buybacks are a way of returning cash to investors, as an alternative to dividedn payouts, and attractive to directors as they increase earnings per share and can inflate share prices.

Energy bills in focus

The Lib Dems want to cut energy bills by launching a Home Energy Upgrade programme, with free insulation and heat pumps for low-income households.

They would also promote heat pump installations with higher cash incentives to get them fitted.

The party would bring in a social energy tariff, giving cheaper energy bills to the most vulnerable households.

It also wants to see energy bill discounts paid for by a one-off windfall tax on oil and gas producers and traders.

More social housing

The Lib Dems said they would make sure 380,000 new homes are built a year, with at least 150,000 being social housing.

By comparison, the current Conservative government has a housing target of 300,000 new homes a year, but only built 234,000 in 2022/23.

Matt Downie, chief executive of homelessness charity Crisis, said: ‘This is a promising set of proposals to tackle the housing and homelessness crisis. It is hugely welcome to see ambitions for a cross-government plan to end all forms of homelessness, alongside a significant social housing programme and the scrapping of the archaic Vagrancy Act.’ 

Free personal care 

The Liberal Democrat manifesto said the party would bring in free personal care in England to help the elderly and disabled.

Care funding is set by each of the UK countries, so the Lib Dems could only tweak policy in England itself.

At the moment, care is means-tested in England, with councils typically only stepping in to help if you have savings of less than £23,250. 

> Read our guide to the Lib Dems personal care plan 

VAT cut on public EV charging

The Liberal Democrats will make life easier for EV drivers by installing more charging points and cutting VAT on public charging to 5 per cent.

The party also said it would ‘protect motorists from rip-offs, including unfair insurance and petrol prices’, but gave no further details.

The Lib Dems also promise to make sure all new car and small van is zero-emission from 2030.

Universal Credit reform

The Liberal Democrats have several plans to reform different areas of the care system, including:

• Scrap the two-child limit and benefit cap for Universal Credit
• Cut the waiting time for the first Universal Credit payout from five weeks to five days
• Make sure that benefits are generous enough to pay for essential needs such as groceries
• Increase Carer’s Allowance by adding £20 a week onto the current maximum of £81.90
• Scrap the ‘bedroom tax’ that sees tenants’ Housing Benefit cut if a property has too many spare bedrooms