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Manifesto round up - business and tax promises

17th Jun 2024
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Over the last week the three main parties in the UK have released their manifestos ahead of the general election on 4 July 2024. In this blog we take a high-level look at some of the key tax promises and other measures impacting UK businesses. Links to the full text of each manifesto are included at the end. 

Liberal Democrats – For a Fair Deal 

A key part of funding for the Liberal Democrats’ manifesto will come from giving HMRC ‘the resources it needs to properly tackle tax avoidance and evasion’. The manifesto estimates this could raise £7 billion. Other funding will come from: 

  • Reversing the Conservatives’ tax cuts for big banks, restoring the Bank Surcharge and Bank Levy revenues to 2016 levels in real terms. 
  • Increasing the Digital Services Tax on social media firms from 2% to 6% 
  • Reforming capital gains tax to close loopholes  
  • Introducing a 4% tax on the share buyback schemes of FTSE-100 listed companies 
  • Imposing a proper, one-off windfall tax on the super-profits of oil and gas producers and traders 

Several pledges in the proposal related to helping entrepreneurs and small businesses to drive growth across the UK. These included: 

  • A review of off-payroll IR35 reforms to ensure self-employed people are treated fairly.  
  • Support will be given to small businesses by tackling the late payment crisis through an enforceable prompt payment code for government departments and larger companies. 
  • Business rates will be abolished and replaced with a Commercial Landowner Levy to help the high streets be more competitive with online retailers. 
  • Expanding the British Business Bank and ensuring small and medium-sized enterprises have access to capital. 

Employment rights were also covered in the manifesto with a particular focus on making suitable changes for the ‘gig economy' including: 

  • Establishing a new ‘dependent contractor status’ between employment and self-employment. 
  • Ensure the tax and National Insurance status of workers is fair and comparable. 
  • Setting a 20% higher minimum wage for zero-hours workers as well as giving a right to request a fixed-hours contract after 12 months. 
  • Reviewing pensions rules so those in the ‘gig economy' do not miss out. 

Other employment-related pledges included making parental leave and pay Day 1 rights, doubling Statutory Maternity and Shared Parental Pay to £350 a week and expanding and improving the Statutory Sick Pay system. 

Part of the manifesto’s ‘fair deal on the economy’ is to invest in skills suitable for the future including replacing the apprenticeship levy with a broader, more flexible skills and training levy and scrapping the lower apprentice wage rate to ensure apprentices are paid at least the National Minimum wage. A Lifelong Skills Grant will also be created to allow people to access training throughout their lives. 

From an international perspective, the Liberal Democrats aim to fix the ‘broken relationship with Europe’ including eventually joining the Single Market. The manifesto also proposes working with international forums including the OECD and the UN to tackle international corporate tax avoidance and make the case for increasing the global minimum rate of corporation tax to 21%. 

Other pledges include: 

  • When public finances allow, raising the personal allowance ‘benefitting the vast majority of families and taking more low-paid workers out of paying income tax altogether’. 
  • Promoting employee ownership by giving staff in listed companies with more than 250 employees a right to request shares, to be held in trust for the benefit of employees. 
  • Protecting the triple lock to support pensioners. 
  • Scrapping VAT on children’s toothbrushes and toothpaste and expanding the soft drinks levy to juice- and milk-based drinks that are high in added sugar. 
  • Introducing proportional representation for electing MPs. 

Conservatives – Clear Plan, Bold Action, Secure Future 

A reduction in National Insurance Contributions was central to the Conservatives’ Autumn Statement 2023 and Spring Budget 2024 and the manifesto builds on this by pledging a reduction in the main rate of Class 1 National Insurance to 6% by April 2027 (halving rates from the start of 2023/24). For self-employed individuals the main rate of Class 4 National Insurance is intended to be abolished entirely by the end of the Parliament. 

Other pledges also built on previous statements including: 

  • Introduction of a household system for the High Income Benefit Charge so families don’t start losing Child Benefit until their combined income reaches £120,000 with gradual removal until household income reaches £160,000 
  • Keeping the VAT threshold under review and explore options to smooth the cliff edge at £90,000 
  • Introduction of the Triple Lock Plus – a guarantee that both the State Pension and the tax free allowance for pensioners will rise with the highest of inflation, earnings or 2.5%. This will be achieved by introducing a new age-related personal allowance. 
  • Creation of more Freeports and enabling councils to retain all business rates growth within a defined Business Rate Retention zone for 25 years which they can use for local investment and infrastructure 
  • Extension of full expensing to leasing once fiscal conditions allow. 

Pledges were also made that there would be no increase to the rate of income tax, VAT, capital gains tax, corporation tax or SDLT whilst several tax incentives would be maintained – Enterprise Investment Scheme, Seed Enterprise Investment Scheme, Venture Capital Trusts, Business Asset Disposal Relief, Agricultural Property Relief and Business Relief. 

Creating further green levies was also ruled out and the manifesto pledged to ensure annual policy costs and levies on household energy bills are lower in each year for the next Parliament than they were in 2023. The windfall tax on oil and gas companies will be kept in place until 2028/29.  

Several measures related to home ownership. These included setting the threshold at which Stamp Duty Land Tax was payable by first time buyers permanently at £425,000 and introducing a new Help to Buy Scheme. A Family Home Tax Guarantee was made to not increase the number of council tax bands or undertake a large-scale revaluation of properties. To encourage further home ownership a two-year temporary Capital Gains Tax relief will be introduced for landlords who sell to their existing tenants. 

As with the other parties, small businesses would be supported by enforcement of the Prompt Payment Code. The business rates multiplier on distribution warehouses that support online shopping will be increased over time.  

From a skills perspective, 100,000 high-quality apprenticeships will be introduced which will be funded by curbing the number of ‘poor-quality’ university degrees. A Lifelong Learning Entitlement will be introduced providing loans to cover new qualifications. 

Other pledges included: 

  • Maintenance of R&D tax reliefs and increased public spending on R&D to £22 billion a year (currently £20 billion). 
  • Mandatory National Service for all school leavers at 18 which is expected to take the form of either 25 days a year volunteering in the community alongside work or study or a year-long full-time paid placement in the armed forces or cyber defence. 
  • Continuing with the plan to remove illegal migrants to Rwanda. 

Labour – Change 

One of the key announcements in the Labour manifesto is that the party will not increase taxes on working people so will not increase National Insurance, the existing rates of Income Tax or VAT. Working people would also be protected by implementing ‘Labour’s Plan to Make Work Pay: Delivering a New Deal for Working People’ which aims to introduce legislation within 100 days to ban zero hours contracts, end fire and rehire and introduce basic rights from day one such as parental leave and sick pay.  

Labour pledges to make sure the minimum wage is a genuine living wage and remove the age bands so all adults are entitled to the same minimum wage. The Apprenticeship Levy would be replaced with a more flexible Growth and Skills Levy and Labour would ensure qualifications offer value for money. 

The manifesto also promised to provide more certainty to individuals and businesses by committing to one major fiscal event a year and publishing a roadmap for business taxation for the next parliament to allow businesses to plan investments. 

As part of providing certainty to businesses the manifesto pledged to: 

  • Cap corporation tax at 25% for the entire parliament.  
  • Retain full expensing and the Annual Investment Allowance and give firms greater clarity on what capital expenditure qualifies for relief.  
  • Replace the business rates system to ‘level the playing field between the high street and online giants’. 
  • Act on late payments, remove barriers to export and reform the British Business Bank to enable small businesses to grow. 

Economic growth would be further supported by establishing an Industrial Strategy Council to provide expert advice with cross-UK representation from different sectors and a National Wealth Fund to make public sector investments and attract private sector funding. Investment from pension funds would also be increased by allowing them to take advantage of consolidation and scale which would also deliver better returns for UK savers. 

Key revenue-generating pledges included: 

  • Abolishing the non-domicile system entirely, replacing it with a modern system for short term visits. 
  • Ending the VAT exemption and business rates relief for private schools. 
  • Ending the use of offshore trusts to avoid inheritance tax. 
  • Closing the loophole where performance-related pay is treated as capital gains in the private equity industry. 
  • Tackling tax avoidance by increasing registration and reporting requirements, strengthening HMRC’s powers and building technology and HMRC capacity.  
  • Increasing the stamp duty surcharge paid by non-UK residents. 

The creation of a new publicly owned company, Great British Energy would help to achieve Labour’s goal of clean power by 2030 by providing co-investment. The sunset clause in the Energy Profits Levy would be extended until the end of the next parliament. The rate would be increased by 3% and investment allowances would be removed.  

Other measures included giving 16- and 17-year-olds the right to vote in all elections and deepening ties with Europe without a return to the single market.