In this second and final instalment of our series, we aim to provide a summary of the main tax policies that the Labour Party plans to introduce should they win the 4 July election and form a new Government.
There are no proposed tax cutting measures and, equally, no planned tax increases beyond measures to tackle tax avoidance and specific targeted interventions. Below are the highlights:
- There will be no increases in National Insurance, nor in the basic, higher, or additional rates of Income Tax, or VAT.
- The rate of corporation tax will be capped at the current level of 25% for the entire next parliament. However, the Labour Party has pledged that they "will act if tax changes in other countries pose a risk to UK competitiveness".
- The permanent full expensing system for capital investment and the annual investment allowance for small business will be retained.
- The tax regime for non-domiciled individuals will be abolished and replaced with "a modern scheme for people genuinely in the country for a short period". Interestingly, the manifesto also refers to the closing of "non-dom discount loopholes" but it is unclear as to what these loopholes are.
- A Labour government will "end the use of offshore trusts to avoid inheritance tax".
- Performance-related pay (carried interest) in the Private Equity industry will no longer be treated as capital gains for tax purposes.
- Stamp Duty Land Tax on purchases of residential property by non-UK residents will be increased by 1% (from the current 2%).
- The VAT exemption and business rates relief for private schools will end.
Reacting to the Labour Party's manifesto, Prime Minister Rishi Sunak said it "would mean the highest taxes in history" and that they are asking the country for a "blank cheque".
The director of the Institute of Fiscal Studies, and indipendent economic research group, has stated "delivering genuine change will almost certainly also require putting actual resources on the table. And Labour's manifesto offers no indication that there is a plan for where the money would come from to finance this".
We will continue to monitor further developments to assist and support you in navigating future changes.