After Labour’s majority in the general election on 4 July 2024, here’s a quick guide to the key tax policies as outlined in their manifesto.
Snapshot Summary
The 17th of July is the first key date, which will be the State Opening of Parliament, this is when Labour will set out its legislative agenda including any specific Bills on its manifesto pledges. Following this will be an Autumn Budget so at present there won’t be any immediate tax changes, however, we would recommend that businesses take advantage of the tax reliefs currently available to them as tax changes are certainly ahead.
Labour’s manifesto included a pledge to not raise taxes for working people. Whilst it cannot be assumed that major tax changes will not happen sooner, the exact plans won’t be totally clear until their first Budget. The first Labour Budget for over 14 years is not likely to be until late September / early October, since the Office for Budget Responsibility (OBR) must be given 10 weeks’ notice. Below, we set out some of the key tax pledges based on Labour’s Manifesto.
Business Tax Corporation tax: No changes to main rate of corporation tax expected.
Annual Investment Allowance (AIA) & Full Expensing: No change expected, apart from further clarity will be provided on what qualifies for capital allowances.
Business tax: Expected roadmap for business tax expected to be published within 6 months.
R&D & Patent Box reliefs: No changes mentioned.
Personal Tax Income tax: They have pledged not to raise income tax rates; however, it is likely the thresholds will remain frozen until 2028.
Non-doms: The non-dom reforms are still likely to go ahead.
National insurance contributions: Labour have stated they will not increase NIC for individuals.
Capital gains tax (CGT)
No promises have been made regarding CGT: meaning an increase in capital gains tax rates can’t be ruled out, Labour have promised that people selling their main home would not pay CGT.
Business Asset Disposal Relief (BADR): There is wide speculation that this will be reviewed – there is the potential for this to be removed completely.
Inheritance tax
- The use of offshore trusts to avoid IHT will be stopped, any assets in offshore trusts will be liable to IHT.
- There are reports that Labour are drawing up significant changes to IHT. This could include scrapping or changing the rules for Business Relief and Agricultural Relief, and/or potential changes to lifetime gifts.
Pensions
- It is highly likely that the pensions landscape will come under review, even though there was no specific mention in the manifesto.
- For example, there has been talk of cuts to tax reliefs on pension contributions for high-earners.
VAT They are proposing to implement VAT on fees to send children to private schools. This could be an increase of 15-20% on school fees.
Other taxes
Stamp duty land tax: They intend to increase the SDLT surcharge by 1% for overseas nationals buying UK residential property, taking it to 3%.
Windfall tax: They have pledged to extend and increase the windfall taxes which are due to expire in March 2029.
Tax avoidance: Labour has pledged to boost the resources at HMRC, which will include an extra 5000 staff, and strengthen HMRC’s powers to encourage a more active enforcement landscape seeking to “close the tax gap”.
Labour’s changes will also include some employment/HR changes which will likely affect your business. It is expected to include some policy and handbook changes, therefore it is important that you stay up to date so that you remain compliant.
The 17th of July is the first key date, which will be the State Opening of Parliament, this is when Labour will set out its legislative agenda including any specific Bills on its manifesto pledges. Following this will be an Autumn Budget, which as we previously mentioned will likely take place in late September/ early October (most likely the latter).
At present, there won’t be any immediate tax changes, however, we would recommend that businesses take advantage of the tax reliefs currently available to them. For example, it may be beneficial to review your succession plan such as exiting or partially exiting your company (before Capital Gains tax changes). We would also recommend taking a fresh look at your situation and there are likely further ways of extracting money from your company as tax efficiently as possible, to pay for things like school fees and other family/life needs.
If you would like to have a conversation with us to ensure that your business is as tax efficient as possible, please get in touch with us, or book a free initial chat via the Calendly link here. We will keep you up to date on changes as they happen, and as always if you have any questions on how your business may be affected, please don’t hesitate to contact us.
Tax changes are certainly ahead, and as always we recommend seeking professional and tax advice. We would strongly recommend every business owner takes a fresh look at their business and their situation – If you are concerned about any specific tax policies and would like to discuss how to address those worries, please get in touch via info@oldfieldadvisory.com or call 02476673160and we will do our best to help.
Please note: This article is provided for information only and was correct as at time of writing (11/07/24). Any lists and details provided above are not exhaustive and are not intended to be full and complete guidance. No action should be taken without consulting detailed legislation or seeking independent professional advice. Therefore, no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this article can be accepted.
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