Now that the main parties have published their manifestos and got a couple more weeks of campaigning under their belt, we have re-visited our earlier blog to see what tax changes might be planned for ahead of our next government.
The headline promises of both parties are pretty similar, with commitments not to increase rates of income tax, NI, corporation tax or VAT, letting fiscal drag quietly increase the tax take in place of unpopular headline rate changes.
Both parties also present as pro-business and promise to maintain capex relief via full expensing and the AIA, as well as taking various steps to improve the current burden of the business rates system.
And of course, habitual promises are made to further clamp down on tax avoidance and close the tax gap by strengthening HMRC powers. Dare we hope this might involve keeping phone lines open and improving call and post waiting times?
In terms of policy differentiators:
- Labour have a handful of fairly targeted tax increases on their radar, including the much touted charging of VAT on private school fees, a further windfall on energy super-profits and closing what they call loop-holes in the proposed non dom changes.
- The Conservatives want to investigate the VAT registration cliff edge problem, re-introduce the age related personal allowance which they withdrew about a decade ago, and look at a capital gains tax break for landlords who sell properties to their tenants.
- The Conservatives promise no new taxes on pensions and retention of the current 25% tax free lump sum, whilst Labour want to review the workplace pensions landscape to deliver what they term ‘better outcomes’ for savers. This appears to be more focussed on the auto enrolment system than the basis of pension tax per-se.
Turning away from what they’ve said, to what they haven’t:
Inheritance Tax
The Conservative manifesto doesn’t contain the words inheritance tax whilst the Labour manifesto mentions it only once, in the context of non dom changes and offshore trusts. Whilst the Conservatives promise to retain APR and BPR, Labour are quiet on that subject.
Those considering the conundrum of lifetime succession for business assets as compared to leaving such assets under a will are left with little indication of what future regimes might look like.
Capital Gains Tax
Labour are also so far refusing to be drawn on capital gains tax, beyond some pretty niche announcements such as withdrawing a treatment which enables private equity returns to be taxed as capital gains and denouncing as untrue rumours of a CGT charge on people’s main homes.
There has long been a tendency for taxpayers to consider locking in capital gains ahead of an election for fear of a rate change, and 2024 may be no different.
In conclusion, the manifestos don’t give taxpayers all that much to base decisions on and it seems to me that the detail in any post election budget(s) will show much more clearly the tax areas which the victorious party, or parties, intend to pursue. The headline promises are all well and good, but those with good memories will recall £1m inheritance tax free allowances turning into the complicated residence nil rate band and 15 years of frozen inheritance tax allowance with the lack of clear majority at least partly the cause of that shift.
The advice in our last blog holds true, but only time will tell what the post election tax landscape will look like.
The next step
To discuss how the issues in this blog affect you or your business, please contact Graham Boar on g.boar@uhy-uk.com, or your usual UHY adviser.
