UK GENERAL ELECTION 2024: THE LABOUR GOVERNMENT'S TAX PLANS

Following Labour’s landslide election victory, SRLV’s partner Steven Wren and director? Kieron Clement-Smith ?recap the party’s key tax pledges, which are likely to be introduced over the next Parliament, and consider other potential tax changes that could be on the agenda.

After six weeks of campaigning, poll predictions of a Labour majority government have come to fruition. The new government’s priority for the economy is growth and tax will undoubtably play a part in facilitating this. Labour has committed to having tax and spending policies fully costed by the OBR (Office for Budget Responsibility) and to an annual autumn Budget, so it’s not likely that we will see any changes to taxation until then.? Furthermore, Labour has committed to publishing a roadmap for business taxation over the course of the next Parliament, within the first six months of forming a new government.

Based on Labour’s election manifesto, the following tax changes are likely to be introduced (subject to the OBR’s review):

• The end of the VAT exemption and business rates relief for private schools
• More clarity on what qualifies for allowances under the full expensing system for capital investment and the annual investment allowance for small businesses
• The treatment of “carried interest” for those working in private equity as taxable income rather than gains
• Reforms to the business rates system to reflect the differences between online and high street retailers
• Reform of the non-domicile regime. This measure had been announced in the last Conservative Budget, however, Labour will legislate and expand on this policy. Notably, they intend to extend the policy by removing offshore trust inheritance tax protections.
• A Stamp Duty Land Tax (SDLT) surcharge increase for non-residents of 1%.? This would take the surcharge for non-residents purchasing UK residential property to 3%.

Labour has ringfenced some areas and pledged not to raise Income Tax, VAT or National Insurance, and to maintain Corporation tax at 25%. During the election, there has been speculation that Labour will increase Capital Gains Tax. If they were to do so, this change is likely to be implemented on the day the policy is announced (such as on Budget Day). Other tax changes tend to be scheduled at the start of the tax year.

Although the party has made these election pledges, it has also committed to respond to tax changes made by other countries, if they pose a risk to UK competitiveness. This gives them the opportunity to abandon certain pledges if they are found to hinder economic growth.

SUMMARY

Although we have an idea of the tax changes that are likely to be announced in the Budget, the full details will not be known until the government publishes further policy details and legislation. Only then will we be able to assess the full impact of any tax changes.

We will be publishing further client updates following the Budget in the autumn, but if you have queries on any of the issues raised in this article or tax changes more generally, then please contact Steven Wren or?Kieron Clement-Smith .

This material is published for the information of clients and contacts. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore, no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or SRLV LLP.