By Nick Haines, partner, Hazlewoods Accountants and Business Advisors 

With the upcoming election next week, we take a look at the key tax pledges issued in the manifestos of some of the main political parties in the running and examine how our tax regime could change as a result.

Corporation tax (CT)

• Labour - Corporation tax rate to be capped at 25%.

• Conservatives - Pledge not to raise CT rates.

• Liberal Democrats - To work with the OECD and UN to increase the global minimum rate of corporation tax from 15% to 21%.

• Reform UK - Minimum profit threshold increase to £100k and a reduction in the CT rate from 25% to 20% with a further reduction to 15% after three years.

Income tax

• Labour - Pledge not to increase income tax rates.

• Conservatives - Pledge not to increase income tax rates. Child benefit to be tapered only where household income is more than £120,000 and a full clawback for household income above £160,000.

• Liberal Democrats - Raising the income tax threshold (when finances allow).

• Reform UK - Raising the income tax threshold at which individuals will start to pay tax to £20k and the higher rate threshold to £70k. Zero basic tax rate to be paid by frontline NHS staff and social care staff for three years.

National Insurance Contributions (NIC)

• Labour - Pledge not to increase NIC rates.

• Conservatives - Further cut to employers' NIC to 6% from 8% by April 2027, with the aim of eliminating altogether in the future. Abolishing Class 4 NIC for the self-employed by the end of parliament.

• Liberal Democrats - no mention of NIC in manifesto.

• Reform UK - Employer's NIC rate for foreign workers to be increased to 20% (currently 13.8%).

Capital Gains Tax (CGT)

• Labour - Pledge to increase the tax take from carried interest returns (currently at 28%) by aligning closer to income tax rates. No commitment to maintain current reliefs or rates.

• Conservatives - Pledge not to increase CGT rates. Two year temporary CGT relief for landlords who sell to existing tenants.

• Liberal Democrats - Reform of CGT with a 20% rate for gains of up to £50,000, 40% for gains between £50,000 and £100,000 and 45% for gains above this.

• Reform UK - Business Asset Disposal Relief rate to be reduced from 10% to 5%.

Inheritance tax (IHT)

• Labour - Will bring offshore trusts within the scope of IHT as part of the new non-dom regime.

• Conservatives - no mention of IHT in manifesto.

• Liberal Democrats - no mention of IHT in manifesto.

• Reform UK - IHT to be abolished for estates of less than £2 million, removing 98% of all estates. 20% rate to be applied to estates above the threshold.

Non-doms

• Labour - Labour have confirmed they will go ahead with the Conservative proposals to abolish non-dom status but with some tweaks including less favourable transition rules.

• Conservatives - It was announced as part of Budget 2024 that non-dom status is to be abolished and replaced with a new regime for those only in the UK for a short period of time.

• Liberal Democrats - no mention of non-doms in manifesto.

• Reform UK - no mention of non-doms in manifesto.

Stamp Duty Land Tax (SDLT)

• Labour - 1% increase to the SDLT surcharge for non-residents purchasing residential properties.

• Conservatives - Pledge not to increase rates of SDLT. No SDLT on residential property purchases of less than £425k for first-time buyers (currently £300k).

• Liberal Democrats - SDLT surcharge on overseas residents purchasing second homes.

• Reform UK - No SDLT on residential property purchases of less than £750k, cut to 2% for properties and between £750k and £1.5 million and 4% above that.

VAT

• Labour - Pledge not to increase VAT rates. Private school fees to be subject to VAT (and business rates).

• Conservatives - Pledge not to increase VAT rates.

• Liberal Democrats - Minor changes such as reducing public vehicle charging VAT rate to 5%.

• Reform UK - Lift the VAT threshold to £150,000. Pledge to abolish the VAT tourist tax.

Other

• Labour - Investment in HMRC to reduce tax avoidance. Reform the Apprenticeship Levy. Further windfall tax on oil and gas giants.

• Conservatives - 'Triple lock plus' for pensioners which includes raising their tax-free personal allowance to ensure the state pension will always remain below the threshold.

• Liberal Democrats - Increase in Digital Services Tax for social media firms and tech giants from 2% to 6%. Review of IR35 rules for the self-employed. End retrospective tax changes such as the loan charge.

• Reform UK - Pledge to collect billions of pounds of unpaid tax by improving HMRC services. To abolish IR35 rules and also abolish business rates for high street SMEs.

A number of parties have set out the taxes which they will not look to increase, however, they have remained silent on others. This could give an indication of where we may see future rises to help pay for any tax cuts along with their parties' spending pledges, which have not been examined in this article.

Although some manifestos have more detailed tax pledges than others, we can start to see what the tax landscape may look like for each party and how these may impact on businesses and individuals.

Following the result of the general election, we will await the first budget of the new Parliament to see which pledges are brought to fruition, along with any surprise tax changes not contained within their manifesto.

Keep an eye out for our next edition of Talking Tax, which will be published shortly after the general election with a more detailed commentary on the tax proposals for the new government.

For more information, contact Hazlewoods' expert tax team for how these proposed changes may impact you at www.hazlewoods.co.uk or call 01242 680000.