GMB star Martin Lewis explains what Labour victory could mean for your personal finances

Martin Lewis has shared his thoughts on the impact of Labour's General Election victory on personal finances.

The founder of appeared on ITV's Good Morning Britain on Friday, July 5, where he discussed the potential financial implications following Labour's sweeping win over the Tories, bringing an end to 14 years of Conservative governance. Sir Keir Starmer is set to enter Downing Street later today as the new Prime Minister of the United Kingdom.

However, his triumph comes amidst a cost of living crisis, with families struggling due to rising prices in shops and escalating mortgage rates over recent years. Martin began by suggesting that Labour will likely soon announce that the UK's financial situation is more dire than anticipated, reports the Mirror.

Sir Keir Starmer and wife Victoria, Lady Starmer
Labour leader and incoming Prime Minister Sir Keir Starmer and wife Victoria, Lady Starmer 10 Downing Street following Labour's landslide election victory -Credit:Getty Images

He then forecasted that any forthcoming changes will need to be cost-effective for the Government. Martin stated: "What I expect is going to happen in the next couple of weeks, is Labour will get fully into Government and do some form of revelation, saying: 'Wow, the finances are so much worse than we expected, there's a big economic black hole, things are going to be very tough,' and then do some expectation management.

"Of course, we all know that already... I've been pushing candidates from all parties of what they're going to do to fill the huge black hole in the nation's finances. I think what that means for the cost of living, is the Government will be looking at things that do not cost the exchequer a lot of money to do.

"They're going to need in the first 100 days to make a difference to the country, they're going to want to show people that things have changed, that they mean action, they're going to start to deliver

"But they're going to have to do it in a way that, where unless it was preannounced in the manifesto, it doesn't cost. "

Martin confirmed that Labour has promised not to raise taxes, but it's important to remember that the threshold for when you start paying tax will remain frozen until 2028. This means more people will be dragged into paying tax when they start to earn more money, through pay rises or getting a better paid job. The MSE founder said Labour could instead look at raising Capital Gains Tax to help plug the black hole, although this has not been explicitly mentioned in the manifesto, so we don't know if this will happen yet.

Rishi Sunak
Rishi has resigned as leader of the Conservative party -Credit:PA

Capital Gains Tax is the tax levied on the profit made on the sale of an asset that has risen in value. Martin commented: "They've said they wont raise taxes, they've also said they wont substantially cut spending, they've also said they wont increase government borrowing and they're not planning on printing money, so that is, all four of your hands tied behind your back.

"It means the only thing you've got filling that black hole is growth and it will be very tough to have growth at the level that is needed to fill it. I think Capital Gains Tax is, to some extent, probably right for a few percentage point raised there.

"It is a lot cheaper to make profit than it is to make income. You're taxed a lot less on profit you make, on selling assets, than you are on earning money."

On the housing front, Martin noted: "Let's see if they can deliver that one. They're also talking about finally banning Section 21 'no fault' evictions.

"There is a huge power imbalance between landlords and renters and that needs to change - and I think it will change. The building homes situation certainly should be helpful for mortgage holders.

He went on to say: "There's been talk for a long time at looking at pensions. They've said they wont change the lifetime allowance back... so its the annual allowance they could change, its a much more radical thing.

"They could limit pension tax relief, so that everybody gets the same, the same tax relief as basic rate taxpayers. At the moment, higher rate taxpayers get more from the state toward their pension because they pay more tax.

"I think we wont hear much of that until September and we don't really know."