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General Election 2024: key business and tax policies


All eyes are on the General Election later this week. We are now in the final days of debates and doorstepping as the campaign trail reaches its conclusion ahead of election day on Thursday 4th July.

 

Each of the political parties have laid out their manifestos, presenting forth their visions for business and tax policies. We have taken a look at each manifesto, to pull together a summary of the key pledges so you feel up to speed ahead of the big day.

 


 

Conservatives

 

The Conservatives have introduced several significant tax policies, which they say aim to ease the burden on individuals and promote economic growth:

 

  • Abolition of National Insurance for the Self-Employed: Currently, self-employed individuals pay 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270. The abolition of National Insurance for the self-employed, benefiting over four million people. This move is aimed at encouraging entrepreneurship and easing pressure on small business owners. However, it will cost £2.6bn annually, raising questions about long-term sustainability.

  • Reduction in National Insurance for Employees: By 2027, the party plans to reduce NI for employees by an additional 2p, building on a 4p cut in 2024. This policy will alleviate the tax burden on employees. The total cost of this reduction is estimated at £5bn per year.

  • Increased Tax-Free Allowance for Pensioners: Future rises in the state pension will not be subject to income tax, ensuring pensioners retain more of their benefits. This measure supports the elderly population and addresses concerns about pension adequacy amid rising living costs.

  • Funding for Tax Cuts: The proposed tax cuts will be financed through a £6bn crackdown on tax avoidance and a £12bn cut in welfare spending by the end of the next Parliament. The feasibility of these savings is debated by analysts, including the Institute for Fiscal Studies.

 


 

Labour

 

Labour's manifesto focuses on wealth creation and improving living standards, with modest tax and spend plans:

 

  • Tax Reforms: Key tax measures include changing non-dom tax status, applying VAT to private schools, and introducing a windfall tax on large energy companies. These policies are expected to raise £8bn in revenue. The application of VAT to private schools is controversial, as it may affect middle-income families and could lead to changes in school demographics.

  • Encouraging Investment: Labour aims to boost investment in training, skills, technology, and buildings to enhance productivity. The emphasis on investment is designed to address the UK's lagging productivity, which has been a significant economic challenge since 2016.

  • Green Investments: Labour proposes £3.5bn in public investments for upgrading homes and developing hydrogen technology. These investments are part of a broader strategy to transition to a green economy and create sustainable jobs.

  • Caution in Spending: Labour plans to leave £2.5bn of the expected revenue unspent, aiming for stability rather than competing with Conservative tax cuts. This cautious approach reflects a desire to maintain fiscal responsibility while implementing progressive reforms.

 


 

Liberal Democrats

 

The Liberal Democrats propose substantial increases in public spending and tax reforms:

 

  • Increased Spending: An additional £27bn per year by 2029, funded by higher levies on banks and reforms to capital gains tax. This ambitious spending plan aims to address various social issues and infrastructure needs but relies heavily on the successful implementation of tax reforms.

  • New Taxes: A proposed aviation duty targeting frequent flyers and a £7bn raise from cracking down on tax avoidance through increased HMRC investment. These measures highlight the party's commitment to environmental sustainability and fair taxation.

  • Maintaining Tax Thresholds: The freeze on income tax thresholds will continue, potentially leading to a post-WW2 high in the tax burden. This policy may have significant implications for middle-income earners, as inflation erodes the value of their incomes.

 


 

Green Party

 

The Green Party aims to significantly increase tax revenues to fund various social and environmental initiatives:

 

  • New taxes: By the end of the next parliament, the party wants to increase taxes by over £170 billion per year to fund a £160 billion boost to day-to-day public spending.

  • Wealth Tax: A new tax on the wealthy, expected to raise £15bn annually. The tax would target individuals with assets over £10m and £1bn. This policy is seen as a bold move to address income inequality and fund public services, though its effectiveness depends on the retention of wealthy individuals in the UK.

  • National Insurance Reforms: An 8% rate on income above the Upper Earnings Limit, impacting higher earners.

 


 

 

Plaid Cymru

 

Plaid Cymru focuses on economic fairness and renewable energy investment:

 

  • Consultation on Independence: While not advocating for an immediate referendum, the party proposes a consultation on the path to independence. This pragmatic approach aims to engage the public in a discussion about the future of Wales while addressing immediate economic concerns. It is campaigning to change how the Treasury adjusts to size of the Welsh government’s budget, with an alternative to the Barnett formula.

  • Windfall Taxes: Increased taxes on oil, gas, and energy companies to fund green jobs and prosperity. This policy aligns with the party's commitment to environmental sustainability and economic fairness.

 


 

Scottish National Party (SNP)

 

The SNP emphasizes full tax devolution and economic growth through tailored policies:

 

  • Full Devolution of Tax Powers: Independence is the goal of the SNP with this election. Advocating for control over National Insurance, windfall taxation, and cracking down on tax avoidance. This policy aims to tailor tax policies to Scotland's specific needs and enhance fiscal autonomy.

  • Economic and Environmental Measures: Proposals include a lower VAT rate for hospitality and tourism, and removing VAT from on-street electric vehicle charging. These measures support economic growth and the transition to a greener economy.

 


 

Reform UK

 

Reform UK presents radical tax cuts and measures to support small businesses:

 

  • Corporation Tax and VAT Reforms: Introducing a corporation tax-free allowance of £100k in profits and raising the VAT threshold to £150k for small businesses. These policies aim to boost small business growth and reduce administrative burdens.

  • Abolition of Business Rates: Removing business rates for small and medium-sized firms on the high street, funded by a 4% online delivery tax for large multinationals. This measure supports high street businesses struggling with rising costs and competition from online retailers.

  • Targeting banks: Plan to stop the Bank of England from paying interest to commercial banks who hold quantitative easing reserves, to save around £35 billion per year.

 

As you might expect, each party's approach offers different opportunities and challenges, making it essential to stay informed and prepared for the possible outcomes. Time will tell as to which direction the UK takes – but thankfully there is not long to wait now.

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