The new UK government and tax

We have a new government, elected with a landslide majority, and so we can expect changes as the new broom sweeps away the cobwebs.

What is clear is that with a declared intent to tackle problems in the NHS and other areas under their influence, the government will need to raise funds if they are to effect economic growth without increasing government debt.

This alert sets out what we know Labour have declared to be their intentions regarding tax changes, what they have said they will not change, and what is speculated they may change.

The government’s declared tax changes

In their manifesto Labour have set out a number of changes to support the implementation of their “change” agenda. They are:

Ending tax breaks for private schools which exempt them from VAT and business rates.

Increasing the levy on North Sea oil and gas producers from 75% to 78% and using this money to towards its wider plans for decarbonisation and energy.

Nom-doms (non-domiciled taxpayers) will likely see a number of changes to their tax status. For example, after four years of residence in the UK (presently 15 years) individuals may be subject to UK tax on their worldwide assets, perhaps including income and gains that arise on non-UK structures. After ten years these individuals may also be subject to inheritance tax on their worldwide assets rather than – as at present – their UK assets.

Taxes Labour have said they will not change

In their manifesto, Labour have declared they will not change Income Tax, National Insurance and VAT. It is also expected that corporation tax will not be increased.

But there are a number of taxes they could tweak to raise funds.

Taxes Labour may change

There is speculation that government may change:

Capital Gains Tax – perhaps by taxing gains at income tax rates.

Inheritance Tax – reducing or eliminating reliefs for lifetime gifts, business and agricultural land.

Stamp Duty Land Tax – it is speculated there will be an increase for overseas buyers.

Wealth Tax – this would be a tax based on an individuals’ wealth or of their UK real property. This option is unlikely to actioned if the government can raise funds from less contentious taxes.

Dividends – at present, dividends are taxed at slightly lower rates than other income. The government may be tempted to equalise the rates.

When will these changes be made clear?

Rachel Reeves, the new Chancellor, will be preparing her first budget or Autumn Statement that will likely be set for September at the earliest. Needless to say, as soon as tax changes are announced, we will update you.

We will also keep a weather eye on possible changes to your tax planning options and keep you informed