MILLIONS of households face tax hikes, higher fuel and diminished pensions if Jeremy Corbyn snatches the keys to number 10 later this month.
Nationalising energy, water, rail and broadband could cost the country £196billion, according to the Confederation of British Industry (CBI), not to mention the £6billion black hole in government spending left by freezing the pension age at 66.
Labour will need to drastically hike taxes in order to raise the £80billion they've promised for public sending, which the Institute for Fiscal Studies warns will clearly affect millions of households outside of the top 5 per cent of earners.
No one is safe under a Corbyn government, whose reforms will damage the finances of those of all ages from families through to retirement age.
From the threat of price hikes at the pumps by oil firms who will be slapped with extra fees to leaving lower income families £250 a year worse off by scrapping the marriage tax allowance.
We spoke to finance experts to find out exactly where Labour’s promises will hit your wallet the hardest.
Families - at least £250 a year worse off
Families will be at least £250 a year worse under Labour’s manifesto promises.
Corbyn had promised that anyone earning under £80,000 would be safe from tax rises, but this quickly unravelled when the cost of scrapping a tax break for married couples was laid bare.
The marriage tax allowance allows low income earners in married couples, or those in a civil partnership, transfer some of their personal allowance - the amount you can earn tax free - to their partner it they’re a basic rate taxpayer.
Currently it’s worth £250 a year, although you can backdate it for up to four years so someone applying for the first time today could save more than £1,000.
While parents footing the bill for their children’s private school fees also face forking out more under Corbyn, who plans to remove the VAT break on school fees.
Who can claim Marriage Allowance?
TO be able to claim your tax break you need to tick all of these boxes:
You can’t claim it if:
For more information visit GOV.UK
“This will see an annual £50,000 bill for two children turn into a £60,000 one,” explains Sarah Coles from Lansdown Hargreaves.
There are bill hikes on the horizon for higher rate taxpayers too.
Those earning between between £80,000 and £125,000 will be taxed at 45 per cent rather than 40 per cent, while those earning £125,000 or more will be taxed at a new 50 per cent rate.
“If you earn £85,000 a year, for example, it will cost you around £250 a year more in tax,” said Sarah, “although this will obviously be doubled if both partners are earning this amount.”
Even children inheriting property from their parents will be stung by up to £140,000 if Corbyn fulfills his promise to scrap the main residence nil-rate band.
This is currently a £150,000 tax break on top of the tax-free allowance for inheritance tax worth up to £325,000 if parents leave their property to their children or grandchildren.
It’s set to rise to £175,000 from April but the break would be scrapped if Corbyn gets into power.
“Labour’s plans to remove the ability of couples to pass on property worth up to £1million to loved ones tax-free will hit elderly homeowners and their beneficiaries,” said Tom Selby, senior analyst at AJ Bell.
Drivers could be worse off
Motorists could feel the pinch at the pump if a Corbyn government forces his proposed windfall tax of £11billion on oil companies.
Labour promises that these costs won’t be passed onto tax payers but big firms may hike prices at service stations to make up the shortfall.
Three ways to cut down your fuel costs
- Make your car more fuel-efficient. You can do this by keeping your tyres inflated, taking the roof rack off, emptying your car of clutter and turning off your air con when driving at lower speeds.
- Find the cheapest fuel prices.Use PetrolPrices.com. All you need to do is enter in your postcode and tell it how far you want to travel (up to 20 miles)
- Drive more efficiently. Some ways to do this, include:
The government could reduce these costs by cutting fuel duty - but Sarah warns that those costs will likely be subsidised by the taxpayers in other ways.
“The other problem is that rising costs means less profits,” explains Sarah.
“And while this doesn’t feel like something that affects your personal finances, if you hold shares as a result of privatisation, or you’re one of millions of people with oil company shares in their pension pot, you could pay the price.”
Pensioners - up to £400 a year worse off
Corbyn wants to abolish the £2,000 tax-free allowance on dividends, which could cost those in retirement upto £400 a year.
A dividend is the money paid regularly by a company to its shareholders.
It's not taxed the same way as other savings or income and at the moment you get £2,000 worth of dividends a year in shares or private pensions tax free.
This means anyone with private pension who is paid in dividends will lose out up to £400.
Around 27.8million households will face paying an extra £216 a year to fund the freeze, something Labour’s left out of their manifesto.
Tom Selby, senior analyst at AJ Bell says that it’s "incredible" that these costings haven’t been made clear.
Top tips to boost your pension pot
DON'T know where to start? Here are some tips from Aviva on how to get going.
Nationalisation could also hit retirement funds for those who’ve invested in shares in companies through a pension scheme if it’s brought under state control.
Under the plans, Parliament would set the price for taking over the firms, which is likely to be below market value, and offer shareholders low-returning government bonds instead.
"The impact on investors could be profound," said Sarah Coles, “and given that so many pension schemes hold these shares, there’s a real risk of long-lasting damage to pension savings.”
Analysis by the Tory Party revealed that overall, Corbyn’s tax plans could end up costing 10million savers and average of £11,000 each - and delay retirement by more than three years.
Small business owners - £4,000 a year worse off
Labour’s plans to scrap the tax-free dividend allowance will also clobber small businesses too, forcing them to pay thousands of pounds more in taxes every year.
Some small business owners pay themselves partly or wholly in dividends because it’s not taxed in the same way as income.
At the moment, the first £2,000 of dividend payments from shares aren’t taxed.
The tax you pay on dividends beyond this depends on how much you earn and is added on top of your other taxable income.
Basic rate taxpayers are charged 7.5 per cent, 32.5 per cent for higher rate earners and 38.1 per cent for the additional rate.
Small business owners will have to pay tax on dividends at the same rates as regular income.
The Federation of Small Businesses (FSB) estimates that a small business owner running an incorporated company earning £60,000 would pay up to £4,000 a year - or up to £333 a month - more in tax.
If they’re earning £40,000, they would pay between £2,000 and £3,000 more tax a year, or between £167 and £250 a month.
“These dividend proposals would mean a huge rise in tax payments that would threaten small business owners earning relatively modest amounts,” Mike Cherry, of the FSB said.
“On the face of it, a small business owner making £40,000 could face thousands of pounds more tax every year. This is a huge concern and urgent clarification is needed.”
Holiday home or landlords - £4,760 worse off
Costs will rise for landlords or those who own a holiday home under Corbyn, who plans to double council tax on these properties will add an average of £2,200 a year to bills, according to Lansdown Hargreaves.
You’ll also face a bigger tax bill when it comes to selling up.
Currently, sellers can earn up to £12,000 (rate set for 2019/20) from selling a second property tax-free.
On anything after that, basic tax payers are charged 18 per cent or 28 per cent if you’re a higher tax payer.
Labour wants to tax the profits like income and will get rid of the extra annual allowance completely.
Sarah said: “If, for example, you earn £30,000 and make £20,000 profit on a property, you’d pay tax of £1,440 on the property sale under the current system and £4,000 under the proposed system.”
Investors - £6,400 worse off
Nationalisation will hit the pocket of anyone who’s invested shares in a firm that is bought by the government under Corbyn’s reign, such as energy or broadband firms.
This includes employees who’ve saved into share save schemes offered by their employers, who may see poor returns if the state seizes the assets for a price below market value.
Two of Britain’s biggest power companies have already moved their businesses abroad to protect themselves and their shareholders for nationalisation.
Labour has said it will tax cash made on investments like income.
It means that the amount basic rate taxpayers pay on profits made from investments will increase from 10 per cent to 20 per cent.
Meanwhile for current higher-rate taxpayers it will increase from 20 per cent to 40 per cent or 45 per cent, depending on how much they earn.
Those on £150,000 or more will go from paying 20 per cent to 50 per cent.
“Over 10 years for someone with an average investment account it will cost up to £6,400 more,” Sarah said.
A Labour spokesperson said: "This fantasy league of fake news and Tory lies is a desperate attempt to protect the super-rich who have held our country back and ripped us off for years.
"Labour will deliver the real change our country needs by asking the top 5 per cent and corporations to pay a bit more."