Views from the Conservative Party Conference

As the Conservative Party Conference draws to a close in Manchester, I have been reflecting on what we have learned about the personal tax landscape from the various speeches, media interviews and side chats. The answer? No surprises and no immediate tax cuts on the horizon.

Chancellor Jeremy Hunt reiterated his commitment to reducing the tax burden especially on incomes but has stated that he has no plans for “big tax” cuts this year as he feels that they would be inflationary.?

UK tax revenues continue to grow with over ￡788.8bn collected in 2022/23 which is an increase of over 10% compared with the prior year. Income tax and national insurance account for over 50% of these revenues so any tax cuts will have a significant impact on the amounts of revenue raised giving the Chancellor limited options.

Interestingly, in his conference speech Jeremy Hunt compared a fall in inflation to an income tax cut. From his speech, “Conference, when we halve inflation, that’s not a 1% income tax cut, it’s a 5% boost to incomes compared to if it stayed the same” so it seems that the focus for the Chancellor is to cut inflation rather than bring forward any tax cuts.?

There was no mention during the Conservative Party Conference of inheritance tax (“IHT”). After weeks of media speculation about a possible abolition of IHT by the current government, IHT was not a feature of either the Chancellor’s or Prime Minster’s speeches. The Conservative Growth Group continue to comment on their report with the Centre for Policy Studies on ‘Family Friendly Taxation: how to restore fairness to the tax system’ which includes two IHT recommendations; (1) abolition of IHT along the lines of Sweden; or (2) increase the nil rate band (the rate at which an estate starts to pay IHT) from ￡325k to ￡1m. Neither option appear to have attracted much media attention.

Pensions, capital gains tax, non-doms, carried interest and wealth taxes are all hot topics but none were headline debates.

So what did we learn from the Conservative Party Conference about the personal tax landscape? To be honest, not a lot. The Conservatives have a clear stated aim of being a low tax party but the economy and, in particular, inflation is preventing any meaningful tax cuts, at least in the short term. The silence on capital taxes, in particular IHT, is potentially interesting in itself and may mean that they are leaving some further announcements until the Autumn Statement on 22 November. In the meantime, the Labour Party Conference will soon be underway and it will be interesting to see if they, too, keep their personal tax plans very close to their chest.