What does a new Labour Government mean for you?

It’s official, we are now under a Labour Government, but what does this mean for you?

Well so far, we only know a little about what is to come over their five-year mandate. Although Keir Starmer voiced many plans during his campaign, we don’t know for certain which ones will come into force or exactly when.

However, what we do know is that Labour has confirmed that personal taxes, such as National Insurance (NI), Income Tax and VAT will remain at their current rate.

They have confirmed that they will not change the current freeze on tax rates, which is due to remain in place until 2028, meaning with the impact of inflation, many people will be taxed more as their wages and income increase.

We also know that Corporation Tax is set to remain capped at the headline rate of 25 per cent – the lowest in the G7.

How will young workers be affected?

While nothing has been confirmed, Labour’s manifesto pledged to remove minimum age bands with the belief that all adults should be entitled to the same wage.

If this policy does come into effect, we could see a pay rise for many workers across the UK.

Will pensions be impacted?

Very little is known about alterations to pension policies, however, Labour did vow to review how they can improve security in retirement.

They have promised to keep the triple lock measure to calculate state pension increases that were introduced by the Conservative Party.

Without tax thresholds being raised, it looks as though many pensioners could find themselves paying a higher tax bill.

Plans to add VAT to private school fees

One of the most talked about plans during the general election campaign was Labour’s intentions to add VAT to private school fees.

They plan to use this money to address the need for more teachers and use it to fund their training.

With only seven per cent of all students attending a private school, it is unsurprising that many voters were in favour of this policy.

Small business support

Labour’s specific plans for small businesses and sole traders aren’t, at first sight, significant, although its broader tax, investment and economic policies, will support SMEs.

They have plans to enhance guidance and simplify the process for small businesses looking to export, which could provide more opportunities to expand their businesses internationally.

Labour also plans to reform the British Business Bank to better support growth in all regions, aiming to simplify access to capital for SMEs to foster expansion and innovation.

Capital Gains Tax, Inheritance Tax and non-doms – what’s coming?

Labour didn’t promise anything about Capital Gains Tax (CGT) in its manifesto. So, with Keir Starmer refusing to rule out raising CGT, it suggests that due to the current financial pressures, an increase could be implemented quickly.

During his campaign, Starmer did however assure that people selling their main home wouldn’t have to pay Capital Gains Tax.

Although personal taxes are expected to stay the same, Inheritance Tax (IHT) and pension tax reliefs could be vulnerable because of this decision, with talk of reducing the current £60,000 pension relief.

The UK government announced plans to phase out non-domiciled status in the Spring Budget, with a transition period starting in April 2025. However, Labour plans to do away with these transition arrangements.

Final insights

While much of Labour’s plans are still unknown, we should have more insights come the next budget, which is expected early in the autumn.

A more in-depth summary of Labour’s manifesto, prepared by our team, can be found here.

We will be closely watching the developments this new Government brings and will be exploring the potential implications they will have.

If you have any questions on how Labour’s policies will impact you and need advice on how to move forward, please contact our team.

Posted in News, Newswire.