What are the Main Political Parties’ Election Tax Policies?
As we move towards 2024 and closer to the next General Election, people are wondering what tax policies to expect from the main political parties. We will get more detail once we have the manifestos to consider – mid to late 2024 in all probability.
In the meantime, here is a summary of what has been ‘hinted at’ or said, so far, by each of the main Parties.
With the Conservatives, we will have both the Autumn Statement and the 2024 Spring Budget to give an indication of their direction of travel in relation to taxation. Whilst they have kept tight lipped about the majority of measures they are planning, the recent defeats in two byelections have accelerated the urgency around announcing Rishi Sunak and Jeremy’s Hunt’s policies for 2024 and it seems that there may some major tax cuts being promised,
- IHT cuts in the Autumn Statement are being widely predicted following recent positive projections on the state of the nation's finances. In relation to IHT, possible changes include:
- Reducing the 40% rate and eventually abolishing it in the future
- Simplifying the system by scrapping the residence nil rate band of £175,000 and increasing individual allowances to £500,000 each instead
- A ‘Green’ Stamp Duty rebate for new homeowners who improve the efficiency of their properties in the first two years of ownership
- Whilst a reduction in the income tax thresholds is unlikely in the Autumn Statement, raising the higher rate 40% threshold as part of the 2024 Spring Budget is being considered
- The government look set to retain the pension ‘triple lock’ into the next Parliament, as per their manifesto promise at the last election, however there have been reports that they may exclude bonuses from the calculation, lowering the wage growth (and hence the pension increase) figure from 8.5% to 7.8%
- Potential overhaul of ISAs system to allow stocks and cash to be held in one ISA account
Until recently, Rachel Reeves has only mentioned a small number of targeted tax increases, which appeal to the traditional left-wing Labour supporter, but none of which are significant revenue raisers. These are,
- Ending (or reducing) the tax benefits of the non-domicile rules
- Treating carried interest as earned income rather than capital gains
- Reinstating the lifetime allowance (LTA) rules for pensions
It is more likely that the non-domicile rules will be changed to reduce the current reliefs than abolished altogether and the probable LTA reinstatement was predicted as soon as it was abolished, resulting in many individuals deciding not to take advantage of the changes at the time.
Removing the charitable status of private schools is a proposal that has now been scrapped, but Labour are still keen to push ahead with adding VAT to private school fees from their first year of government if they win the next general election.
There have also been more recent pledges made, designed to appeal to a more Conservative voter, with Reeves confirming that,
- she had no plans to align capital gains tax rates with income tax rates, or to restrict relief for high earners’ pension contributions
- A previous plan from Starmer to raise the top rate of tax is “off the table”
- “Any form of wealth tax” is also a no-go, despite the recent re-emergence of proposals on this issue
- The party does not have “any plans to increase taxes outside of what we’ve said” i.e. if they have not mentioned it, it will not be brought in
This does not leave much scope for tax raising measures within the Labour manifesto – we shall have to wait and see what comes out of the woodwork.
In the meantime, if you would like to discuss the potential impact of any of the proposed plans on your tax affairs and how you might be able to mitigate against these, please get in touch. We have a wealth of experience advising our clients in these areas.