Now we know that Labour will be in government for the next five years, we’ve reviewed their Manifesto promises to see what might be in store from a personal and business finance perspective.
How closely they stick to it and what else might be in store will only be revealed in the forthcoming months, but we’ve checked what was published just weeks before they came into power.
In May, Rachel Reeves ruled out an immediate emergency Budget as Labour would not hold a Budget without forecasts from the Office of Budget Responsibility which would take ten weeks to commission. Based on this a first Budget under a Labour Government is more likely in the autumn, which would fall in line with the usual rhythm of Autumn Statements. She has also previously committed to publishing a five-year business tax roadmap within the first six months of taking office.
There was little change to note in their Manifesto from a tax perspective but a clear desire to make reforms to the pensions industry so as to attract more money to UK infrastructure projects, and close offshore tax loopholes.
Tax
No increases to income tax, National Insurance, VAT, and corporation tax were mentioned.
There is a desire to crack down on tax avoidance by modernising HMRC. This includes raised registration and reporting requirements, greater HMRC’s powers, investing in new technology and a focus on large businesses.
On Capital Gains Tax they will close loophole on performance-related pay in private equity industry which treats this as capital gains, rather than income, for tax purposes.
There will be a time-limited windfall tax on oil and gas giants which will be used to fund a publicly-owned clean power company.
Stamp duty will increase by 1% on purchases of residential property by non-UK residents.
VAT will be applied to private school fees. This could be delayed until 2025 but anti-forestalling rules may also accompany it.
Pensions
The state pension triple lock will be protected.
Workplace pensions will be reviewed with an intention to consolidate funds and deliver greater scale in order to deliver better returns for UK savers. There is also a strong desire to use this to generate more investment into UK businesses.
The Mineworkers Pension Scheme unfair surplus arrangements will be reviewed and the Investment Reserve Fund will be transferred back to members.
Trusts
Labour have promised to end the use of offshore trusts to avoid inheritance tax so that everyone who lives in the UK pays tax in the UK.
Summary
With a consistent and commanding lead in the polls for some months Labour were able to keep their powder dry ahead of the election, and this gives them plenty of scope to make changes without being accused of breaking manifesto promises, if they need to. It was Sunak and the Conservatives who were throwing in late tax cuts and changes to try and recover lost ground.
We don’t know when the UK’s first female Chancellor will roll out Labour’s fiscal plan, but our best guess is the autumn. With the heavy emphasis placed on growth, and Labour’s positioning as a party at the centre of the political spectrum, we are not anticipating radical change.
