The Labour Party officially won in Parliament on the last 4 July 2024 general election. It was a majority win, ending the Conservative Party’s 14-year rule. So, what is next for tax? To recall, the Labour’s tax manifesto includes not increasing income tax rates, National Insurance, or VAT.
An increase of SDLT rates for non-UK residents (in England and Northern Ireland), however, may be likely as the Party considers a 1 percentage point rise. On the other hand, the Labour Party intends to cap corporation tax at 25% and maintain key capital allowances to foster business investment.
Despite pledging no major changes to council tax bands or private residence relief on capital gains tax, the Labour’s plan to freeze income tax thresholds will likely push more people into higher tax bands.
Moreover, the Party plans to abolish non-domiciled tax status, end VAT exemption and business rates relief for private schools, and restrict offshore trusts to avoid inheritance tax. Carried interests may soon get taxed as income, and loopholes on oil and gas firms’ windfall tax will be further scrutinised and closed.
The Labour has committed to reducing tax avoidance, aiming to modernise HMRC with an investment of £855m, expected to yield an additional £5.2bn in tax receipts by 2028/29. They plan to enhance registration and reporting requirements, strengthen HMRC’s powers, invest in new technology, and focus on large business and wealthy individual tax avoidance.
They have also committed to maintaining the state pension triple lock and preserving the 25% tax-free lump sum at retirement whilst reforming workplace pensions to deliver better returns for savers.
Whether their initial plans take place or not, be sure to stay tuned for the changes. Get your major UK tax updates here at Legend Financial. For your tax affairs, call us today!
