Focus on Tax Planning Ahead of Labour Government Budget

Earlier this morning, Keir Starmer was confirmed as the new Prime Minister as Labour swept to a huge majority.  This was not a huge swing in votes with just 3% more votes for Labour than there were in 2019. This was more a protect vote against the Conservatives in England and Wales and a vote against the Scottish National Party in Scotland.

That said, with 412 seats so far (2 to declare) and a majority over the Conservatives of 291 seats (they won just 121 seats), this means that anything Labour wishes to push through Parliament will happen.

It is time to get prepared and start planning your taxes now before Labour’s first budget (like to be in November).

We have suggested previously that despite Labour promises that they will not increase basic, higher, and additional rate taxes to protect working people as well as not reintroducing the lifetime allowance on pensions, they will tackle the lowest hanging fruit and no doubt raise tax revenues from other areas of taxation that were clearly not even mentioned in their manifesto document.

If you have not done so already, we suggest you need to start planning.

In just 5 minutes today, we invented 10 tax hits that would not break Labour's Manifesto promises as follows:

• Could Capital Gains Tax rates on investments increase?
• Could Capital Gains Tax allowances disappear?
• Could Capital Gains Tax reductions for property gains for higher rate taxpayers be reversed?
• Could Dividend Tax allowances disappear?
• Could Dividend Tax rates increase?
• Could Inheritance Tax be extended with a new Pensions on Death Nil Rate Band – e.g., pension funds on death worth above £1m to be taxed at 40%?
• Could Inheritance Tax rates be increased above say £1m estate?
• Could an ISA lifetime allowance limiting the amount we can all build up in tax free savings be restricted to say £0.5m?
• Could Council Taxes become payable on Holiday Lets?
• Could new ‘immediate’ taxes on growth or income (even when not remitted back to the UK and left invested) be introduced for offshore investments and pension schemes in the same way as much of Europe does already?

None of the above mean an increase to working people with little or no savings but would hit those that have inherited wealth or worked hard and built-up wealth.

Comment

You should consider acting now whilst you have current, known tax allowances and exemptions as changes are to come and the omission of capital gains tax, inheritance tax and dividend taxes in the Labour Manifesto are clearly ‘red flags’ to us.