- Posted by Jason on May 31, 2015 in Banking Global Economies
Whether you’re pleased with the recent election results or not, it appears that the Conservatives are here to stay for a second term. But what does this actually mean for remittance senders in the UK? We’re going to take you through the implications of new Tory policies on sending money home, particularly for those of you who have become citizens and those who are new arrivals.
Taxation – Altering Your Take Home Pay
It’s no secret that your take home pay impacts exactly how much you can send home. The Conservatives have predicted that their tax cuts will benefit 30 million people, and anyone earning less than £12,500 will be exempt from income tax altogether.
One of the Tory’s key pledges is to legislation to keep those working 30 hours a week on minimum wage free from income tax. If you’re in this situation, you’re in luck – you’ll have more to send home via remittance.
If you’re earning a little more than this, you’re also in luck – the dreaded 40% tax threshold is to be increased from £41,450 to £50,000. This means that you’ll pay less tax if you’re earning more than £41,450, but less than £50,000 and you’ll have more money to send home.
The Conservatives have also promised not to raise VAT or National Insurance contributions across the board. While you won’t end up with more money in your pocket because of this, you certainly won’t end up with less.
The Conservatives have also promised working parents of 3 and 4-year olds 30 free hours of tax-free childcare a week. This means lower living costs for families and more money that can be sent home. It also reduces the costs of working – making employment a much more attractive option all around.
Unfortunately, some of the Tory’s immigration policies aren’t too migrant friendly. The most prominant policy requires that migrants, including those from the European Union (EU), live in the UK for four years before they are eligible for social benefits such as public housing and benefits. This higher threshold will likely hit new immigrants hard – allowing less money to be sent home to families in need. However, those who are employed in the UK will not be affected by this.
The Conservatives are also clamping down on immigration, with an aim to keep net migration at a 20,700 person cap annually on non-European immigrants. This is a huge cut compared to previous net long term migration of 298,000 immigrants in 2014. Such clamps will make it significantly harder for immigrants to gain permanent citizenship in the UK. The Tories will also adopt a “deport first, appeal later” system, making it even tougher for people to immigrate, along with language tests for those wishing to work in the public sector. However, provided you have skills that are beneficial to the UK economy, it should still be possible to immigrate.
The Conservatives also plan to hold a referendum to decide whether they should remain a member of the EU. If voters choose to remove Britain from the EU, any form of migration from Europe to the UK will become much more difficult.
There is also to be a crackdown on illegal immigration, in an attempt to tackle people trafficking and the exploitation of workers.
Benefits and Welfare
Since the new Tory policies encourage people to work, benefits have been reduced to compensate – after all, tax cuts must come at some cost to society. The party has specifically turned its focus on making working worthwhile – culling incentives to remain on welfare, and giving benefits (such as lower tax rates and free childcare) to those who do chose to work.
The maximum benefit that a household can claim is to fall from £26,000 to £23,000 (however there are still exemptions for those on Disability Living Allowance or Personal Independence Payment benefits). They also offer increased support to those transitioning from welfare back to work. These reductions are expected to save taxpayers around £12 billion – accounting for the tax cuts promised by the Conservatives.
In line with their focus on employment, the party plans to reach more or less full employment for those willing to work. This will be achieved through road, railway and infrastructure investment, creating jobs for tradespeople and labourers. Government funded childcare hours will also increase the demand for other professions also, such as education and day-care. Also, many resources are being allocated towards the environment – such as the £500m being spent towards making most vans and cars emission free by 2050. While there is debate as to how successful this will be, the use of funds will, at least, provide specialist funding for various scientific professions.
It’s important to remember that these policies are just that – policies. These are subject to change and realistic conditions (for example – achieving “full employment” may turn out to be less achievable than expected), however these are things as they currently sit.
Regardless of Tory policies and promises, you can still send money home. OrbitRemit offers low cost, attractive exchange rate transfers between the Pound and many other currencies. Check out our calculator on the top right hand side of the screen to work out exactly how much will reach your family!
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