Labour is in, what does this mean for our taxes?

With Labour's promises to close tax loopholes and overhaul HMRC, the change in government brings a plethora of policy and tax changes. In this blog we have outlined the most prominent changes likely to happen along with what we can expect from some of them.

Income and employment taxes

• No increase in income tax rates or NIC for individuals.
• Tax bands remain frozen until 2028 which can propose issues for those moving into a higher bracket due to rising wages.

Non-domicile (non-dom)

• Labour plans to abolish the non-dom tax status to raise an extra “£5 billion” a year. Non-dom's, UK residents whose permanent home is outside the UK, were benefiting from not having to pay taxes on income made outside the UK. Labour state this system had loopholes that were being exploited, as individuals could state a lower-tax country as their domicile.

Business taxes

• Corporation tax rates will remain the same, these current rates are outlined on one of our previous blogs on the subject.
• Plans to replace business rates to help “level the playing field”, what these changes will be are yet to be announced.
• Pledges to extend the duration of Oil and Gas levy and increase the rate by 3%.

Indirect taxes

• Impose VAT and business rates on private school fees, they claim the funds raised will go towards the hiring of new teachers, work experience and career advice for all young people, Ofsted reform and mental health support for every school.

Inheritance tax (IHT)

• Labour wants offshore trusts to be liable for IHT. Any other significant changes haven't been specified but may be consulted for in the future.

Environmental measures

• Propositions for increased R&D support/ investment to clean energy developers.
• Reinstate the ban on internal combustion engine car sales by 2030 and boost EV infrastructure.
• Introduce a “UK Carbon Border Adjustment Mechanism” to prevent countries from “dumping lower quality” goods into British markets whilst we decarbonise and aim to meet the UK climate objectives.

Employee rights

• Introduce comprehensive reforms, including banning what they describe as “exploitative contracts” such as zero hours contracts and fire and rehire.
• Due to average employer spending on training falling by 27% since 2011, Labour wants to overhaul the current Apprenticeship funding to be more flexible, essentially allowing businesses to use some of the money they receive to train existing staff instead.

Worried about any of these changes?

At Elite Financial Accounting we can put your mind at ease with our comprehensive and tailored services, we aim to find solutions for any issues you may face. Contact us today and see how we can help.