The election results are in, and the Labour Party has won the mandate to form a new parliament. What could this mean for the taxes you pay?

Will there be an emergency budget?

Labour is expected to outline their initial plans in an ’emergency’ budget, likely not before September or October, as the Office of Budget Responsibility (OBR) requires 10 weeks to prepare independent forecasts on the plans.

While further details will emerge over the coming weeks, here’s a review of what looks likely in the main tax areas based on their manifesto:

Income tax changes

  • No increase in income tax rates.
  • Pension reforms are planned.
  • There is no mention of changes to 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 retained, with further details on qualification criteria to follow.

Corporation Tax

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

VAT

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

Capital Gains Tax (CGT)

  • No specific mentions of changes to CGT rates or reliefs.
  • The ‘carried interest tax loophole’ will be closed, mainly affecting private equity executives who receive a stake in the funds they manage rather than 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 could hint at possible increases for UK residents in the future.

If any of these changes affect you, please contact us for personalised advice. As your tax advisers, we will continue to keep you updated on tax changes to help you plan your affairs and minimise tax payments.