Election tax policies quick guide

A summary of key personal and business tax policies in announcements and the manifestos of the Labour and Conservative parties ahead of the 4 July election. More detailed information is contained in our Election Tax Watch article.

[First published 13 June; updated to 1 July]

Tax	Conservative	Labour
INCOME TAX (IT)
IT rates	No change	No change
IT thresholds	Frozen until 2028, but not for pensioners	Frozen until 2028 for all
IT thresholds for pensioners	Continue the Triple Lock and introduce the new Triple Lock Plus from April 2025 so that tax-free personal allowance for pensioners would rise by whichever is highest out of inflation, wages or 2.5%	Retain triple lock for pensioners, but no Triple Lock Plus
IT Marginal rate	lower the 60% marginal rate for those earning between £100K and £125,140 per year	No change
High Income Child benefit charge (HICBC)	Raise the household income threshold at which families start to pay the HICBC from £60,000 to £120,000.	No change
Carried interest for investment managers	No change	Tax rate to rise from 28% to 45%
PENSION TAX RELIEF
Pension contributions tax relief	Maintain tax relief on pension contributions at their marginal rate; no new taxes on pensions.	To review the pensions landscape. (Not in the manifesto but has previously advocated cutting pension tax relief for high earners)
Pension lifetime allowance	Scrapped already	Was going to reintroduce, but decided not to
NATIONAL INSURANCE CONTRIBUTIONS (NICs)
Employee NIC rates	Cut employee NICs to 6% by April 2027, halving it from 12% .	No cuts planned
Self-employed NICs	Abolish Class 4 NICs by the end of the next Parliament .	No cuts planned
CAPITAL GAINS TAX (CGT)
CGT rates	No change	A rate change (aligned with income tax rates?) not ruled out in the manifesto
CGT private residence relief	to be maintained	No change
CGT business asset disposal relief	No change (but was reduced when Sunak was Chancellor)	Will be reviewed
Furnished Holiday Lettings	Scrapped in April 2025 (not legislated for)	Scrap in April 2025?
Buy to let landlords	From April 2025 a two-year temporary CGT relief for buy-to-let landlords who sell to their existing tenants	No plans on this
INHERITANCE TAX (IHT)
IHT rates/thresholds	Long term aspiration to cut IHT rates (not in the manifesto)	No changes mentioned
Offshore Trusts	No change	End the use of offshore trusts that avoid IHT
IHT exemptions for agricultural/farmland	No change	To be closed or restricted (not confirmed in the manifesto)
IHT business relief for shares in an unlisted company	No change	Plan to end the relief (not confirmed in the manifesto)
WEALTH TAX	No plans for one	No plans for one
NON-DOMS	Changes announced in Spring Budget from April 2025 (not legislated for)	Less generous transitional relief for the April 2025 proposed changes
STAMP DUTY	Abolish stamp duty for first-time buyers on the first £425,000 of a property's value. Note this was a temporary rise in the threshold from £300,000 that is to be made permanent.	Stamp Duty threshold to return to £300,000 on 1 April 2025. Plus increased surcharge for overseas buyers by 1% to 3%
BRITISH ISA	No date set for the launch	Will push ahead with the measure
COUNCIL TAX	No change in bands or revaluation	Band changes and/or revaluation not mentioned in the manifesto

Tax	Conservative	Labour
CORPORATION TAX (CT)
CT rates	No change	No change
CT R&D relief	No change	No change per their 2024 Business Growth plan
CT Patent Box	No change	No change
CT Full expensing	To be extended to leased assets in the future when economically viable to do so	No change
Annual Investment Allowance	No change	No change other than saying they will provide greater clarity on what qualifies for capital allowances
Business tax roadmap	No plans for one	Published within 6 months of the election
EMPLOYMENT TAXES
Employment Allowance	Maintained at £5,000	No plans mentioned
Apprenticeship Levy	No changes planned	Replace the Apprenticeship Levy with a new Growth and Skills Levy
Employment status	No changes	Single status of the worker to redefine employment, with some employment rights to the 'genuinely' self-employed, including Statutory Sick Pay. No promise to look at IR35 or Off-payroll Working. There may be a consultation at some stage.
Minimum Wage	Maintain national minimum wage at 2/3rds of median hourly earnings	Low Pay Commission to take account of the cost of living. Remove age bands so that all adults are entitled to the same minimum wage.
PROPERTY TAXES
Business rates	Support package worth £4.3bn, and an increasing business rate multiplier on warehouses that distribute for online stores	Replace with a new property tax, and remove exemption for private schools
VALUE ADDED TAX (VAT)
VAT on private education	No	Yes at 20% (but maybe delayed until Sep 2025)
VAT threshold	To be kept under review and look at options to smooth the cliff edge	Not clear
VAT rate	No change	No change
TAX AVOIDANCE	£6bn tax crackdown	£5bn tax crackdown
WINDFALL TAX ON OIL COMPANIES	Extended to 2029	Will increase the level of tax
FUEL DUTY	Fuel duty frozen	No mention in the manifesto, but a fuel duty increase has not been ruled out

Contact us

If you would like to discuss how the election and possible change of government may affect your taxes or those of your business, please contact your usual Bishop Fleming advisor.

[Gary Mackley-Smith]