News
Labour Party Tax Reforms: What can we expect?
05 Jul 2024
With the recent electoral victory, the Labour Government is prepared to implement a series of tax reforms that promise to reshape the business landscape in the UK. These changes are intended to create a more equitable tax system, support public services, and stimulate sustainable economic growth. Understanding these potential tax reforms is crucial to strategic planning and long-term success for businesses and investors.
Our Tax Partner James Clark explains in further detail what taxes a Labour Government could implement.
Tax Under Labour
Income Tax, National Insurance and VAT
In its election manifesto the Labour party ruled out increases to income tax, National Insurance, and VAT, however it has not extended this promise to capital gains tax. This has led some to believe their intention is to increase CGT in line with income tax rates, but would they really double the rate of tax so soon after getting into power?
VAT on Private Schools
Whilst Labour promised to not increase the rate of VAT, one of their key proposals was to apply VAT (and business rates) to private schools where currently there is none. This measure aims to increase tax revenue and level the playing field between private and state schools. However, the introduction of these changes is likely to be deferred until September 2025 to avoid disruption mid-academic year.
Closing Non-Dom Tax Loopholes
Labour plans to close the non-domiciled tax loopholes which currently allow wealthy individuals to avoid paying UK tax on foreign income. The change was announced by the Conservative party in this year’s Budget, but it was the intention of Labour to do the same if they won the election so expect this measure to be implemented in due course, but most likely in a less generous form.
Labour also intends to end the use of offshore trusts to avoid inheritance tax. This policy aims to ensure that wealth transfer is taxed fairly, regardless of where the assets are held. Families and individuals using offshore trusts for inheritance planning will need to explore new strategies.
Increased Stamp Duty for Non-UK Residents & first time buyers
Stamp duty on residential property purchases by non-UK residents will potentially see a 1% increase under Labour. This measure aims to curb property speculation and make housing more affordable for UK residents. However, Labour refused to make permanent the temporary increased thresholds for first time buyers meaning an increase in 2025 for those who need it most.
Certainty Around Corporation Tax
Labour has promised to maintain the corporation tax rate at 25% for the next five years, providing businesses with much-needed certainty. This stability will help businesses plan their investments and financial strategies with confidence.
Conclusion
The Labour Government’s tax reforms will bring substantial changes to the UK’s tax landscape. Businesses and investors must stay informed and proactive in adapting to new policies. As always, strategic planning and expert advice will be key to navigating these changes successfully.
If you would like to discuss how WR Partners can support you and your business following tax changes under the new Labour Government, contact us today! Use the form below, and we will get in touch with you shortly. Alternatively, you can contact hello@wrpartners.co.uk or call us on 01743 273273
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