Post-Election Commentary
With Sir Keir Starmer as the UK’s new Prime Minister after the Labour Party’s victory, our experts have provided in-depth insights into the potential implications for various sectors and services.
Our Election Hub commentary aims to help you understand how this significant political shift might influence industry sectors going forward.
Please also look forward to more updates from our experts.
Transport & Logistics
Hospitality & Leisure
Manufacturing
Property Sector
Now that Labour are confirmed as the new government it will be interesting to see what impact their policies will have on the property and construction sector of the economy.
They have promised reforms to planning regulations to facilitate more house building which if successful could have a positive impact on the sector. However, possible tax rises in areas such as SDLT and capital gains tax could impact negatively discouraging investment.
At present we have very little detail in respect of the labour policies so we will have to wait and see what they announce in their first budget.
Technology
Tech sector commentary
With the result of the election concluded, and the count going as expected, we hope that the impacts on the Technology Sector are ultimately positive – certainly the markets have remained stable to the news. With many of the taxes pledged to be frozen, certainly around employment, it leaves the focus on CGT, pension tax reliefs and areas such as R&D. Ultimately, the government will need to continue to grow the economy, and technology is always seen as key to enabling this outcome. Technology is an active market, and in bigger picture terms, investment or acquisition opportunities come from the top. If investment incentives were removed, or CGT tax rates increased, this would provide less incentive to investors taking risks. This hopefully limits the likelihood of significant changes, and we would encourage the new government to now look forward and promote the R and D tax relief, rather than further restricting it. Likewise, reducing pension tax incentives, which often feed into stock markets may also be playing with a double edged sword – both in terms of short term corporate investment, and in the longer term the wealth of the country at retirement age.
As the UK’s strength in the technology sector is largely seen as start-up/scale-up, the government would be well minded to try to increase our incentives after the initial scale up phase, to retain high growth business in the long term, reducing acquisitions by the US tech sector and allowing the UK to grow its own unicorns.
Employment Landscape
General Commentary
Capital Gains Tax
Recent discussions have centred around the potential increase to the rate of Capital Gains Tax (CGT) now the Labour Party will form the next government. Although the Shadow Chancellor has previously stated that Labour has ‘no plans’ to equalise CGT with Income Tax rates, the possibility of rate changes to narrow the gap between these taxes remains a possibility. This is perhaps especially so as Labour have reconfirmed their commitment ‘not to increase income tax, national insurance or VAT (outside school fees) which puts other taxes arguably under greater scrutiny. Business owners, investors and landlords should therefore be paying close attention, given the uncertainty surrounding future tax rates, and consider pre-emptive tax planning with the assistance of qualified tax professionals especially in cases where one is already planning to sell; there seems little reason to delay. Should this be of interest, we encourage you to contact us for further guidance.
| Current Rules | Labour | |
| Personal allowances | Maintain the freeze until 2028 | |
| Income Tax | Any increases ruled out | |
| NIC | Any increases ruled out | |
| CGT | No changes announced (meaning they may be possible as this is not perceived to be a tax on working people by Labour) | |
| VAT | Any increases ruled out However, certain services may potentially be brought into the VAT regime (e.g. private school fees) | |
| Stamp Duty Land Tax | Labour proposed increasing the existing 2% SDLT charge for overseas buyers acquiring residential property in England and Northern Ireland by a further 1% | |
| Corporation Tax | Labour announced that they will cap Corporation Tax at the current rate of 25% and committed not to remove the full expensing and the annual investment allowance | |
| Pensions | Labour dropped their pledge to reinstate lifetime allowance | |
| Private Equity | Labour proposed shutting the current regime and taxing carry at income tax rates (instead of CGT at 28% under the current rules) | |
Domicile Reform
The new outcome of the general election will undoubtedly have significant implications for the UK’s economic and financial landscape.
Our detailed table below provides an overview of Labour’s proposal. We hope this analysis aids you in navigating the complexities of these policies and helps you make an informed choice at the polls.
If you believe you may be affected by any of the changes, reach out to us to discuss and consider your tax planning options.
Non-dom regime
In March 2024, the government proposed substantial reforms to the existing non-dom regime, which are expected to significantly impact non-UK domiciled individuals and trusts with overseas connections. Although these changes have not been implemented during this parliamentary term, the Labour Party has expressed general support for these reforms, or indeed these ideas perhaps originated from the Labour Party.
The expectation is that the Labour Party will take a similar stance on non-doms albeit removing some of the softer transition rules and short-term opportunities. If you believe you may be affected by these changes or are planning to move to the UK and wish to explore the potential benefits of the proposed new regime for those coming to the UK, please get in touch with us to discuss and consider your tax planning options.
| Current rules | Labour | |
| Eligibility (Income Tax / CGT) | Non-dom UK resident individuals under 15 years | No changes suggested to the government’s proposals |
| Basis of taxation | UK source income and gains subject to UK tax Foreign income and gains subject to UK tax only if remitted | Labour are considering an additional exemption for UK source investment income as an additional incentive |
| Trust protections for income and capital gains | If a trust was settled by non-dom settlor, foreign income and most gains can roll up in the structure tax-free Potentially subject to UK tax only by reference to distributions made to UK residents | No changes suggested to the government’s proposals |
| IHT on assets held directly | Non-doms who have not been UK residents for 15 years are only subject to IHT on UK assets (including UK residential property held indirectly) | No changes suggested to the government’s proposals |
| IHT on assets held in trust | Foreign assets held by a trust settled by non-dom settlor who has not been resident in the UK for 15 years are not subject to IHT | Labour proposed that all Trusts, whenever settled, will no longer qualify for the IHT exemption (if Settlor has been UK resident for over 10 years) |
| IT reduction | N/A | Labour proposed to eliminate this relief |
| CGT rebasing | N/A | No changes suggested to the government’s proposals |
| Temporary Repatriation Facility | Foreign income and gains taxed at up to 45% when remitted to the UK | Labour have indicated that they will consider applying an incentive for NDs to bring their foreign income and gains to the UK after this relief is due to expire on 6 April 2027 It is not clear whether this relief will be extended or the incentive will take a different form |