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What might the change of government mean for business owners?



With Labour's landslide victory, what might the change of government mean for the tax you pay?


Will there be an emergency budget?


Labour will likely set out their initial plans in an ‘emergency’ budget. This will probably happen in September or October, as the Office of Budget Responsibility (OBR) will need 10 weeks to prepare independent forecasts on the plans.


Further details will no doubt emerge over coming weeks, but here’s a review of what looks likely in the main tax areas (based on the manifesto):


Income tax changes


  • No increase to income tax rates.

  • Pension reforms are planned.

  • No mention has been made about the tax-free allowance.


National Insurance Contributions (NIC)


  • A promise has been made not to increase employees’ NIC.


Business tax


  • A roadmap for business taxation will be published in coming weeks.

  • Full expensing and the Annual Investment Allowance will be kept. Some further details to come that should clarify the qualification criteria.


Corporation tax


  • Corporation tax to be capped at the current main rate of 25% (paid by companies with profits of £250,000 and over) for the whole of the next parliament.


VAT


  • No increase to the VAT rate.

  • VAT will be applied to private school fees.


Capital Gains Tax (CGT)


  • Nothing has been specifically mentioned on CGT rates or reliefs.

  • The ‘carried interest tax loophole’ will be closed. This mainly affects private equity executives who receive a stake in the funds they manage rather than traditional remuneration.


Inheritance tax


  • No expected changes to current rates or reliefs.

  • The use of offshore trusts to avoid inheritance tax will be ended.


Stamp duty land tax


  • The existing surcharge on purchases of residential property by non-UK residents will increase from 2% to 3%.



If any of these changes affect you in any way, please contact us and we will be pleased to give you personalised advice. As your tax advisors, we will continue to keep you up-to-date on tax changes so that you can plan your affairs to minimise paying tax.

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