How will a Labour government affect my finances?

“While Labour’s manifesto was relatively light on detail, its Plan for Growth document published in January provides insight into the key areas that the new government is likely to focus on,” Tom Selby, director of public policy at AJ Bell, said in a note.

So what will Keir Starmer and his Chancellor Rachel Reeves do now?

Mansion House Reforms: Here to Stay

Among their priorities could be a review of UK pensions to unlock more private investment in UK PLCs. That means Jeremy Hunt’s Mansion House scheme will now, in all likelihood, continue.

“According to the Labour Party, at the turn of the century, British pension funds and insurers owned 39% of the shares listed on the London Stock Exchange. By 2020, they owned just 4%,” Selby said.

“It is clear that any changes to the asset allocation within these schemes will need to be made in a way that does not harm the interests of members, but given the amount of money circulating within defined benefit schemes, even relatively small changes could have a significant impact on the UK economy.”

Mary Cahani, director of UK Pensions at Invesco, also agrees that Labour is unlikely to reverse the Conservatives’ work on pension reform. Despite this, she predicts that pension taxation will return to the spotlight as a source of funding for other government policies.

“There could be a review of pension tax relief or annual allowances that are subject to such relief. However, there have been reports that Labour has ruled out reintroducing the Lifetime Allowance, which was abolished by the Conservatives earlier this year,” she said in a note.

“Another option could be to review the tax-free lump sum, but that may not go down well with the public.”

Under pension freedom rules set out by the coalition government in 2014, savers can take 25% of any private pension pot as a tax-free lump sum, a scheme that has proved almost universally popular, and Labour under Ed Miliband and Jeremy Corbyn has struggled to oppose it.

But just as pension freedom raised questions about public access to financial advice, the current pressure to improve consumer financial literacy and confidence has not gone away.

“The targeted support model is a practical response to the advice gap identified following the Retail Distribution Review,” Cahini said.

“This model recognises that consumers making complex financial decisions may not always want or be able to access regulated financial advice and we believe it would significantly improve the current situation where consumers may not receive professional support at all.”

She added that the model could also support savers in the “accumulation” phase, as well as enable consumers to make decisions about their retirement funds after retirement with the support of professionals.

Selby also suspects that Labour’s new mandate could be an opportunity to reform individual savings accounts (ISAs). There are currently six different types of ISA. Some argue there are simply too many, and simplifying the system would give savers more freedom to move between cash and investments within one tax package.

“The first step the next government should take should be to combine cash and equity ISAs, the two main ISA products used by investors,” Selby said in a note.

“This move would make it easier for investors to switch between cash and investments and move us towards a world where investments are simply a feature of ISAs, rather than a defining feature.”

In addition, a Starmer government could increase the ISA allowance from £20,000 to £25,000 and scrap the “British ISA” proposal announced by former chancellor Jeremy Hunt in the Budget earlier this year.

Non-domestic side effect: how does Labour intend to raise money from taxes?

However, Yazmin Boden, a partner at wealth management firm GSB Wealth, is concerned about changes Labour may make to the tax treatment of non-domiciled UK nationals.

Until recently, UK residents who were permanently resident abroad paid no tax on income earned abroad, even though they worked and lived in the UK itself.

The topic is so controversial that Jeremy Hunt himself announced a ban on the use of the status, which has previously been used by businessman Roman Abramovich, former Bank of England governor Mark Carney and former Prime Minister Rishi Sunak’s wife Akshata Murty.

The Labour Party also backed the ban, but questions remain about its consequences.

“The proposed changes to the tax treatment of non-UK residents are likely to have a negative impact on the inheritance tax system for UK and non-UK residents,” Boden said.

She believes the proposed changes will discourage wealthy people from settling in the UK.

Jason Hollands, managing director of investment platform Bestinvest, also agrees that inheritance and pension tax relief could now be under threat, with Labour already pledging not to raise income tax, VAT, national insurance tax or corporation tax.

Indeed, Labour will have to find a way to increase tax revenues somewhere.

“Parliamentary dominance is one thing, but as Liz Truss and Kwasi Kwarteng discovered with their memorable mini-Budget, maintaining credibility in the financial markets is also crucial,” Hollands said.

“Keir Starmer and Rachel Reeves, who have carefully nurtured relationships with the City and the business community, will be aware of the need to build confidence in financial markets,” he said.

“For the foreseeable future at least I would expect Labour to stick to the policies outlined in the campaign rather than spring surprises, radical new ideas out of a hat.”