We have all now settled into the idea that we have a new government which was elected with a landslide majority. We can turn our attentions now to Labour and tax and the expected changes as the new broom sweeps away the old cobwebs.
What is clear is that with a declared intent to tackle problems in the NHS and other areas under their influence, the government will need to raise funds if they are to effect economic growth without increasing government debt. So, what we know is that Labour have declared to be their intentions regarding tax changes, what they have said they will not change, and what is speculated they may change.
Labour and tax – what are the new government’s declared tax changes?
In their manifesto Labour set out a number of changes to support the implementation of their “change” agenda. They are:
Ending tax breaks for private schools which exempt them from VAT and business rates. So, VAT on private school fees.
Increasing the levy on North Sea oil and gas producers from 75% to 78% and using this money to towards its wider plans for decarbonisation and energy.
Nom-doms (non-domiciled taxpayers) will likely see a number of changes to their tax status. For example, after four years of residence in the UK (presently 15 years) individuals may be subject to UK tax on their worldwide assets, perhaps including income and gains that arise on non-UK structures. After ten years these individuals may also be subject to inheritance tax on their worldwide assets rather than – as at present – their UK assets.
Labour and tax – what taxes did Labour say they will not change?
In their manifesto, Labour have declared they will not change Income Tax, National Insurance and VAT. It is also expected that corporation tax will not be increased.
But there are a number of taxes they could tweak to raise funds.
Labour and tax – what taxes could Labour change?
There is speculation that government may change:
Capital Gains Tax – perhaps by taxing gains at income tax rates.
Inheritance Tax – reducing or eliminating reliefs for lifetime gifts, business and agricultural land.
Stamp Duty Land Tax – it is speculated there will be an increase for overseas buyers.
Wealth Tax – this would be a tax based on an individuals’ wealth or of their UK real property. This option is unlikely to actioned if the government can raise funds from less contentious taxes.
Dividends – at present, dividends are taxed at slightly lower rates than other income. The government may be tempted to equalise the rates.
What date is the Autumn Statement 2024 or first Labour Budget?
Rachel Reeves, the new Chancellor, will be preparing her first Budget or Autumn Statement, this is likely be set for September at the earliest, maybe even October. Needless to say, as soon as tax changes are announced, we will update you.
We will also keep an eye on possible changes to your tax planning and, of course, keep you informed.
If you would like to speak to a member of our Tax team about anything mentioned in this post, please contact us on 020 7870 9050 or email us at hello@rpgcc.co.uk.
