By 28 January 2025, a UK general election must have been held. By law, Parliament will be dissolved by 17 December 2024 and 25 working days allowed to prepare for this election to take place.

However, between then and now, the current Conservative Government can choose to call an election whenever they deem that they should do so.

At the time of writing, Labour is currently leading quite substantially in several of the polls, but this could all change by the time an election is called.

Nevertheless, because of current voter intentions, speculation is already growing on what a future Labour Government might mean for businesses, taxation, the economy and finance.

With the Spring Budget now out of the way, we seem to have a clearer picture of the Conservative approach to taxation and economic support, which may allow us to consider the impact of potential election outcomes – regardless of any political views.

Labour’s current position

As no election has been called yet, we still don’t have a clear manifesto from the Labour Party.

However, there have been some key events in the last 12 months, that indicate the direction the party is heading.

At the last Labour Party Conference, key figures including the Leader of the Opposition Sir Keir Starmer MP outlined Labour’s proposed taxation policies.

These include implementing a new Charter for Budget Responsibility to ensure transparency in tax and spending changes, increasing the stamp duty land tax surcharge for overseas property buyers and extending the windfall tax on energy companies.

It has also pledged to maintain the same fiscal rules as the current Conservative Government. Additionally, Labour aims to abolish the non-domicile tax status – a move that has since been proposed by the current Government as its own policy in the Spring Budget 2024.

At Labour’s Business Conference in February 2024, Rachel Reeves pledged to maintain the Corporation Tax rate at 25 per cent for the next Parliament, along with other business-friendly measures.

She also confirmed that a roadmap for business taxation would be published within the first six months of a Labour Government.

The wider economic view of the Labour Party, published in its most recent policies, focuses on a unique concept known as “securonomics”.

Labour claims its growth strategy is ambitious, aiming for the highest sustained growth among G7 nations. Through ‘Securonomics’, it intends to blend modern supply-side economics with a focus on resilience.

The goal is to bolster domestic production and reduce reliance on global supply chains, mitigating vulnerability to international disruptions.

Central to this plan is fostering economic stability, crucial for inspiring business confidence and encouraging investment.

With a General Election expected by January 2025, Labour’s taxation proposals remain somewhat ambiguous, as does its wider approach to the economy.

However, this may be an intentional move to prevent other parties from undermining their key campaign points ahead of a general election.

The Conservative position

Unlike the Labour Party, the economic and taxation intentions of the Conservative Party are quite clear, especially after the Spring Budget.

With a focus on a low taxation, high growth economy, the Conservative Party has launched several new measures that seemingly aim to encourage certain taxpayers to pay more, in particular non-doms, simplify the tax system through measures, such as the R&D tax merger, and encourage business investment through Full Expensing.

Other measures such as the reduction in Capital Gains Tax on second homes for higher-rate taxpayers are balanced against other property tax measures, such as the abolition of tax relief for Furnished Holiday Lets and the end of Multiple Dwellings Relief.

With falling inflation and wages being driven up from the bottom by employee pressure and changes to the National Minimum Wage, the Conservative Party appears to be making a concerted effort to create an economy that supports a wide array of taxpayers, while still recognising their key voter demographics.

The current Conservative Party policy also confirms their pledge not to raise the rates of income tax, National Insurance or VAT.

It also focuses on “backing entrepreneurs and innovation, making Britain the best place to grow and start a business and ‍levelling up Britain’s skills”, many of which have already been backed by funding in recent Budgets and Financial Statements.

However, these measures sit against a backdrop of higher tax receipts collected, due largely to the effect of fiscal drag, which has been extenuated by the ongoing freeze on personal tax allowances.

While the Conservative Party may speak of giveaways and help for taxpayers, the reality is that due to inflation and previous steps taken by those in power over the last 13 years many of us are paying more in tax than before.

This is unlikely to change unless steps are taken to unfreeze personal tax rates before they are currently due to be unfrozen in 2028.

The other positions

Whilst the UK very much remains a two-party electoral system, due to the mechanisms of the first past the post voting system, the impact of other parties in the electoral race could be more influential as an election approaches.

The Liberal Democrats, Green Party and newly formed Reform UK will all have manifestos that may place political pressure on both the left and right of UK politics to adapt their approach. 

It will be worth assessing their policies in detail as well, as they are released, to consider their effect on the attitudes and actions of an elected Government.

This could be all the more critical if any of these parties are called upon to join a coalition Government in future, should voting intentions shift substantially.

Overall analysis of left vs right

While much is made of the great political divide in the UK, when it comes to economic and taxation policy there is more that unites than separates in reality.

Barclays CEO, C.S. Venkatakrishnan, recently said that the difference in Labour and Conservative economic policy is ‘fairly minimal’.

Similarly, Mark Littlewood, the Director General of the Institute of Economic Affairs – a free-market think tank – recently appeared on GB News to say: “It is extraordinary, I mean, I’m finding it really difficult to work out what the actual policy differences are between the Labour front bench and the Conservative Government at the moment.

“People might take a view on who you think the more competent managers are, who’s better on television, or the rest of it. But in terms of policy, there doesn’t seem to be a great deal of difference between the Conservatives and Labour.”

With this being the case, at least for the time being, the change in Government may not have as substantial an impact on personal wealth, economic growth or taxation as some believe an election might bring.

As more policies and eventual manifestos are released by the major parties, we will continue to keep you updated so that you have a clearer view of what each potential election outcome might bring for you and your business.