UK General Election 2024 – Tax Summary
With the UK General Election fast approaching, each of the major political parties has released its manifesto, outlining the policies they stand for and aim to implement if elected to govern. But what are the plans for each party regarding tax? How might they affect you and your business?
Read on to find out the answers to these questions in our tax summary of the 2024 manifestos.
Conservatives
The Conservative Party have elected to go for a similar approach to their current policies regarding business tax. In their manifesto, there is no mention of any additional tax cuts for businesses, with the focus instead staying on maintaining the existing reliefs, regimes, and tax incentives already in play. This means Corporation Tax and Capital Gains Tax would remain at their current rates.
One key thing that they have pledged to explore is the VAT threshold, which has been raised from £85,000 to £90,000 in the 2024/25 tax year, to help make registering for VAT and the financial implications of doing so a less daunting prospect for small businesses.
The Conservatives have also announced some changes to employee and self-employed National Insurance Contributions (NICs). In the next parliament, they plan to fully abolish self-employed NICs as a series of staggered 1p cuts and reduce employee NICs by a further 2p.
They have also said that they plan on fully removing employee NICs “when the financial conditions allow,” but there has been no confirmation of a timeline.
Labour
The Labour Party manifesto is largely in line with other documents that they have released in the run-up to the election. They have strictly confirmed that there will be no increases to NICs, Income Tax rates, or VAT.
The Corporation Tax rate, if Labour is elected, will stay at the current rate of 25%, and the Annual Investment Allowance will also remain unchanged. In their manifesto, Labour reiterated that they would publish a full “business tax roadmap” within six months of taking office.
This business tax roadmap will be designed to replace business rates with “a fully costed and funded system of business property taxation,” essentially attempting to create a more equal system between high street businesses and online giants. They have also committed to reforming the Apprenticeship Levy, replacing it with a “Growth and Skills Levy.” On the personal tax front, there have been no major changes announced but many taxes, including Capital Gains Tax and Inheritance Tax, have not been mentioned at all in the manifesto. They have, however, promised to crack down on tax evasion and end VAT exemption on private school fees.
Liberal Democrats
The Lib Dems are putting forward some serious tax reforms, notably from a business tax perspective. They aim to restore the income earned from the Bank Surcharge and Bank Levy to 2016 levels in real terms, along with a considerable tax on oil and gas profits.
Additionally, they want to increase the Digital Services Tax to 6% (from 2%), introduce a sewage tax on water company profits, introduce a 4% tax on share buy-backs, and introduce a levy on tobacco companies.
This means that generally, banks, oil giants, and online operators will be paying more in tax than smaller businesses. Proposed reforms to Capital Gains Tax and Income Tax will also benefit business owners and employees in lower tax brackets.
Green Party
Suggesting perhaps the widest tax reforms, the Green Party have elected to introduce business tax rises that would total an estimated £43 billion, including an extension of the windfall tax on oil and gas producers. They also plan to introduce a Carbon Tax, charged at £120 per tonne and rising to £500 per tonne after 10 years.
With personal tax, they hope to equalise Capital Gains Tax and Income Tax, restrict up-front Income Tax Relief on pensions, and reform Inheritance Tax.
Larger businesses would feel the effect of these changes the most, especially if they have large-scale logistics operations that produce significant carbon waste. Small businesses would only notice a difference should they produce significant carbon waste, while business owners and individuals may pay more should they sell goods that qualify for CGT.
Reform UK
Reform UK discuss sweeping tax policies that would affect both businesses and individuals, most notably raising the minimum profit threshold on Corporation Tax to £100,000 and increasing the VAT threshold up to £150,000. They also plan on reducing Corporation Tax to 20% immediately, and then down to 15% after three years.
For individuals, they plan to increase the threshold at which people start to pay Income Tax to £20,000, raise the higher income tax rate threshold to £70,000 and abolish IHT on estates valued under £2 million.
Get in Touch for Business and Personal Tax Advice
As a Chartered Accountants in Birmingham, we offer tax advice in the Midlands and across the UK to ensure that businesses and individuals alike can mitigate their tax burden and get the most out of their money.
Whether you need corporate tax planning, private tax advice, or simply want to position yourself or your business in the best possible way after the election, the experts from our leading accounting company in Birmingham can help.
Get in touch today on 01922 743 100 and find out how we could help you or your business maximise your income.
