Election results in: What will be the effect on your tax bill?

What the Labour Party’s Election Win Means for Your Taxes

With the Labour Party securing a mandate to form a new parliament, significant changes could be on the horizon for the tax landscape. Here’s what you might expect:

Will There Be an Emergency Budget?

Labour is expected to outline their initial plans in an ‘emergency’ budget. However, this is unlikely to take place before September or October, as the Office of Budget Responsibility (OBR) requires approximately 10 weeks to prepare independent forecasts on the proposed plans.

In the coming weeks, more details will undoubtedly emerge. Here’s a review of the likely changes based on Labour’s manifesto:

Income Tax Changes

• No increase to income tax rates.
• Pension reforms are planned.
• No mention has been made about the tax-free allowance.

National Insurance Contributions (NIC)

• A promise has been made not to increase employees’ NIC.

Business Tax

• A roadmap for business taxation will be published in the coming weeks.
• Full expensing and the Annual Investment Allowance will be maintained. Additional details will clarify the qualification criteria.

Corporation Tax

• Corporation tax will be capped at the current main rate of 25% for companies with profits of £250,000 and over for the entire next parliament. This may imply potential increases for companies benefiting from the small profits rate or marginal relief.

VAT

• No increase to the VAT rate.
• VAT will be applied to private school fees.

Capital Gains Tax (CGT)

• No specific mentions have been made regarding CGT rates or reliefs.
• The ‘carried interest tax loophole’ will be closed, primarily impacting private equity executives who receive stakes in the funds they manage instead of traditional remuneration.

Inheritance Tax

• No expected changes to current rates or reliefs.
• The use of offshore trusts to avoid inheritance tax will be ended.

Stamp Duty Land Tax

• The existing surcharge on purchases of residential property by non-UK residents will increase from 2% to 3%.
• This may suggest that further increases could be in store for UK residents as well.

For those in Wimbledon and beyond, if any of these changes impact you, please contact ACCOUNTANTS IN WIMBLEDON. We are here to provide you with personalized advice. As your trusted tax advisers, we will keep you updated on tax changes, helping you plan your affairs to minimize tax liabilities.