What will a Conservative government mean for your finances?

David Cameron's surprise election victory has not provided the political certainty you might expect: his Conservative government has an ultra-slim majority of 12 seats - thin compared with the 78-strong majority the prime minister enjoyed as head of the coalition. Nevertheless, the Conservatives do now have a mandate to implement their programme in full.

A 'Blue Budget' will be unveiled on 8 July, which will have significant implications for personal finances. The chancellor, George Osborne, will look to implement the policies in the Conservative manifesto, while quietly dropping ideas developed with his former Liberal Democrat colleagues.

His Budget will have to reflect the Conservatives' promise not to meddle with the main rates of income tax, national insurance and VAT, while raising funding for some of those unfunded manifesto pledges. Look out for lots of fine-print change.

So what does the election result mean for savers, investors and family finances? It will have consequences in many areas.

FINANCIAL MARKETS

The post-election relief rally, which saw the FTSE 100 rise back above 7000 just as the Conservatives clinched their overall majority, was short-lived.

The UK equity market lost several hundred points over the following days amid nervousness about the Greek financial crisis.

That pattern is a reminder that the UK stock market is not solely influenced by domestic factors, as Richard Buxton, head of UK equities at Old Mutual Global Investors points out. 'This result was old news within days, if not hours,' he says.

'We're back to the real issue of watching the US Federal Reserve attempt the near-impossible task of gently nudging long bond yields and short interest rates higher without damaging economic activity or precipitating a bond market collapse.'

Nevertheless, some sectors had more to fear from a Labour victory than others - notably the utilities, banks and tobacco companies, all of which faced higher tax bills or more regulation and have therefore enjoyed a fillip since the election.

Less happily for businesses that depend on exports, the pound has strengthened since the election, on the grounds that a Conservative victory means accelerated fiscal consolidation and a greater likelihood of earlier interest rate increases.

Looking ahead, Paras Anand, head of European equities at Fidelity Worldwide Investment, points out that political uncertainty remains, despite a more conclusive election result than most pundits had anticipated.

He says: 'A more fragmented political landscape is likely to remain with us for an extended period. The challenge this represents to investors is new, which is perhaps why the market has struggled to price it in.

He adds: 'While such a landscape may pose an obstacle to contentious policies being supported, other than in a very diluted form - which is good news on the whole - it does leave certain industries more vulnerable to one-off politically driven adjustments than we have been used to seeing over the past 20 years.'

The biggest uncertainty of all over the short term is the question of the UK's continued membership of the EU, as the Conservatives are committed to holding a referendum in 2017, or even sooner, once they have attempted to negotiate a new deal with other EU members.

Gary White, chief investment commentator at Charles Stanley, warns that the referendum debate 'will hurt the economy, because it is likely to result in sharp falls in investor confidence and business investment'. Exporters are likely to suffer a double whammy.

They will be concerned about their sales in a key market and uneasy about the difficulties an increase in currency volatility could cause. The referendum is likely to trigger greater volatility in bond markets - particularly for gilts, where the strength of sterling is already edging yields up.

INCOME TAX

The former coalition government's policy of raising the personal allowance so that fewer people pay any income tax at all was Liberal Democrat inspired.

Osborne's promise to get the personal allowance up to £12,500 by the end of the new parliament will now be scrutinised closely. He may, instead, prioritise his promise to move the higher-rate tax threshold to £50,000 over the same period.

What you pay in tax may come to depend on where you live, as the Scottish parliament is set to receive new powers to vary income tax rates in Scotland.

The Conservatives have promised imminent legislation to prevent Scottish MPs voting on rates of income tax in England.

ISAS AND OTHER SAVINGS

Coming soon to the UK's savings sector: two new types of individual savings account. First up, the Help to Buy Isa, which is scheduled for the autumn.

Savers putting money aside for the deposit on their first home will be able to put up to £200 a month into a tax-free bank or building society savings account, and they will get a £50 top-up from the government for every £200 saved. The money can be used to fund a deposit on a property purchase costing up to £250,000 (£450,000 in London).

The top-up goes straight to the mortgage lender and is only paid out if it is used for a housing transaction. You can only open one Help to Buy Isa (although you can keep paying into it for as long as you want), and you can't do it in a year when you have also opened a conventional Isa.

The Conservatives have promised detailed plans for a second type of individual savings account, a peer-to-peer lending Isa, in the summer. These would enable people who lend money on crowdfunding platforms such as Zopa and Funding Circle to hold their loans within an Isa and shelter the interest from tax.

March's Budget saw Osborne promise not to tax savings interest of up to £1,000 and £500 a year for basic- and higher-rate taxpayers respectively. This pledge will now be honoured with effect from April 2016.

PENSIONS

Former pensions minister Steve Webb lost his seat in the election, so he would not have returned to office even if his Liberal Democrat party had continued to play a role in government.

Webb, one of the few pensions ministers in recent years to have actually understood his brief, will be missed by the retirement planning industry, but his replacement, the long-time pension campaigner and Money Observer commentator Ros Altmann, is no less expert and experienced.

Altmann, moreover, was pushing for radical reforms such as the abolition of compulsory annuitisation years before the previous government was converted to this cause (and even before she became a Conservative Party supporter).

The job will include implementing the government's previous proposal to allow people who have already bought pension annuities to auction them off to the highest bidder, which is likely to be possible from next April onwards. 'It is only fair to give people a choice,' Altmann said in March when the idea was floated.

Meanwhile, wealthier savers face imminent cuts to the tax relief available on pension contributions. For people with annual earnings of £150,000 or more, the Conservatives plan to cut the annual allowance - the amount of pension savings people can make each year while still qualifying for tax relief - from £40,000 to £10,000.

The cuts are likely to be introduced gradually, but could begin to take effect from the date of the emergency budget.

INHERITANCE TAX

The raid on higher earners' pension tax breaks will fund inheritance tax cuts, which could also be introduced in an emergency Budget.

The Conservatives' proposal is that everyone will keep their current £325,000 inheritance tax allowance (worth £650,000 to a married couple), but they will also get an additional £175,000 allowance each (£350,000 for couples) that they can use when leaving their main home to their children.

The effect for anyone whose property is worth less than £1 million will be to take their main home out of the inheritance tax net.

This additional allowance will still be available to many families whose homes are worth more than £1 million, reducing their inheritance tax bills substantially. But it will be gradually withdrawn from people whose properties are valued at £2 million or more. Those with homes worth more than £2.35 million won't benefit at all.

PROPERTY

The Conservatives' manifesto pledge to implement a right-to-buy scheme for housing association tenants claimed to offer up to 1.3 million families the chance to get on the property ladder at discounts of up to 70 per cent on the market value of their homes.

The scheme was roundly criticised by many housing groups, but some form of the scheme is likely to go ahead - although property experts will want more detail on how the government will simultaneously boost house-building programmes.

One emergency budget measure to look out for is the abolition of housing benefit entitlement for 18 to 21-year-olds currently claiming benefits such as Jobseeker's Allowance. This could force some young people to move back in with their parents.

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