What might the 2024 general election mean for taxes?

There were a number of announcements made at Spring Budget 2024 with an intended start date of April 2025. However, with a general election on the horizon these may now never make it into law, particularly if there is a change of government.

There is typically an emergency budget in the aftermath of a general election and we are therefore likely to hear the plans of the incoming Chancellor before the end of the year.

A re-elected Conservative majority might resist bringing forward a third Finance Bill of 2024 and instead schedule any new policies into the normal Spring 2025 timetable. However, a government of any other persuasion, including a coalition, is far more likely to accelerate putting their new tax policies onto the statute book

Whilst none of the main parties have yet published their manifestos, some election promises are starting to be leaked via the media.

One of Labour’s earliest commitments was to not increase either Income Tax or National Insurance (NI)In addition to this, they have also discussed the following considerations:

• Introducing VAT and higher business rates on private schools;
• Closing so-called loop-holes in the Conservative ‘non-dom’ reform plans;
• Increasing taxes on private equity managers by tightening rules around carried interest, and
• Capping Corporation Tax at 25% for the whole of the next Parliament.

The Conservative direction of travel is mainly gleaned from their recent Spring Budget, including:

• Reforming the ‘non-dom’ regime to make it less generous;
• Abolishing the furnished holiday let regime;
• Reducing National Insurance, with what they phrase as a long-term ambition to abolish it altogether;
• Lifting more people out of the ‘high income child benefit charge’, and
• Retaining higher pension annual allowances and the abolition of the pensions lifetime allowance.

Whilst there is always a bustle of tax speculation around general elections, some proves accurate and some less so, it is a pertinent time to consider your finances.

Individuals

If you habitually use your tax allowances then do so ahead of any post-election budget. Including pension contributions, ISA allowances, capital gains annual exemption, Inheritance Tax annual allowance and gifts of surplus income allowance.

Consider accelerating or deferring transactions. For example, if you fear capital gains rates may increase, then there is a window of opportunity to crystallise gains under the current regime. Whereas, if you think Stamp Duty Land Tax (SDLT) rates or house prices or interest rates may come down, then there is scope to delay a property purchase until 2025.

Business owners

Review any large or abnormal spending such as plant and machinery purchases which may currently benefit from full expensing or Annual Investment Allowance (AIA).

Fundraising under Enterprise Investment Scheme/Seed Enterprise Investment Scheme (EIS/SEIS) is another example of where monetary limits may change.
Consider any in-progress transactions. If you have a part completed transaction then completing it ahead of any post-election budget should lock in current tax regimes..

There is no doubt that new tax pledges will trickle out as full manifestos emerge. What the future holds is yet to be deciphered!