While we do not intend to engage in political commentary, we do think it may be useful and insightful setting out the main tax policies that the Conservative Party plans to introduce should they win the election on 4 July 2024.
These are largely tax cutting measures, possible and sustainable in the eyes of the incumbent Conservative government because inflation is deemed to be back to normal levels and the government debt on track to fall from next year. Below are the highlights:
- Cutting the employee National Insurance contribution rate to 6% by April 2027. This rate was 12% at the beginning of the current calendar year and was reduced to 10% on 6 January 2024, and again to 8% on 6 April 2024.
- The abolition of the main rate of Class 4 National Insurance contributions for self-employed individuals by the end of the next Parliament.
- No increases in the rates of income tax, capital gains tax, VAT, or corporation tax.
- The introduction of a new Triple Lock Plus for pensioners, ensuring the State Pension increases in line with the highest of prices, earnings, or 2.5%. The tax-free personal allowance for pensioners will also rise by the highest of prices, earnings, or 2.5%, ensuring that the new State Pension remains below the tax-free threshold.
- Maintaining current pension tax benefits, including the 25% tax-free lump sum and tax relief on pension contributions at the marginal rate.
- The threshold for Stamp Duty for first-time buyers will increase to £425,000 (from £300,000), making this change permanent.
- Maintaining tax reliefs such as the Enterprise Investment Scheme, Seed Enterprise Investment Scheme, Business Asset Disposal Relief, and R&D Relief.
- A further £6 billion a year will be raised from tackling tax avoidance and evasion by the end of the Parliament.
The Labour Party has claimed to have identified errors in the costings of these and other non-tax proposals. The director of the Institute for Fiscal Studies, an independent economic research group, has also expressed a "degree of scepticism" about how these policy plans are funded.
However, the Conservative Party manifesto does not address either the abolition or reform of the tax regime for non-domiciled individuals (announced on 6 March 2024 and explained in our newsletter) or changes to Inheritance Tax.
We will continue to monitor developments and assist you with navigating future changes.