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What could the Labour and Conservative manifestos mean for business?

| Graeme Hills | 14 June 2024

With the General Election less than three weeks away, the major players vying to secure a majority government have now released their manifestos - but do they spur on the public or raise crucial concerns for businesses and voters alike?

National Service and no new taxes: The Conservative Party Manifesto

The Conservative’s key pledges focus on:

  • Keeping the ‘triple-lock’ pension to ensure that retirees benefit from a rise in their tax-free pension allowance every year
  • A 2p reduction in National Insurance (from April 2027)
  • £8.3bn investment for potholes and road surfaces with £36bn for transport infrastructure, including rail, road and bus services
  • 2.5m more NHS dental appointments, 92,000 more nurses and 28,000 more doctors to meet surging demand in healthcare
  • Mandatory national service for 18-year-olds
  • A complete abolition of Stamp Duty for homes up to £425,000 and an improved Help To Buy Scheme
  • 1.6m new homes “while protecting the countryside”

The long-term ambition to completely dissolve National Insurance is a promising prospect, but after consistently high increases in the cost of living, voters are likely to want more immediate relief.

To that end, the proposed increase in the National Living Wage would be well-received by earners on applicable levels of income, but the party should carefully consider the impact this could have on businesses. Large increases have already been keenly felt by many businesses, particularly those in the leisure and hospitality sector struggling to reconcile rising costs.

However, there is some potential relief for SMEs - which do, after all, constitute 99% of UK businesses. Promises to ease the burden of business rates for high-street, leisure and hospitality companies and retain key tax incentives (such as Agricultural Property Relief and Business Relief) may be beneficial. Other areas such as investment in Freeports and investment zones, like the East Midlands Freeport aiming to create 28,000 jobs locally, could also bode well for businesses

Wealth creation the “number one priority”: Labour’s Election Manifesto

The Labour Party’s key pledges are to:

  • Kickstart a major shake-up of benefits to “make work pay” and reduce national unemployment
  • Cap Corporation Tax at 25%
  • A new ‘fiscal lock’ to protect the public from ad hoc taxes
  • Raise £1.5bn by ending tax breaks for private schools and a further £565m by closing the “carried interest” tax loophole enjoyed by private equity chiefs
  • Nationalise railways
  • Empower local mayors to make key transport and planning decisions
  • Switch on Great British Energy, a publicly-owned clean power company
  • Adjust the National Minimum Wage to accurately reflect the cost of living - with no age limits
  • Ensure no increase in National Insurance, Income Tax or VAT

Labour’s manifesto seems to prioritise economic growth and improving living standards by cultivating national prosperity - one element of which is by ensuring there are no further increases in core taxes. The proposed ‘fiscal lock’ aims to ensure that no government can enforce significant tax changes without first being subject to scrutiny by the Office for Budget Responsibility - to avoid knock-on market impacts such as those created by Liz Truss’ disastrous mini-budget.

The party also promise to pull “every available lever” to supercharge investment in the economy, with a £1.5bn pledge to the automotive industry in the form of new gigafactories - it seems Labour’s manifesto makes bold promises, but will such promises be enough to secure a Labour majority come July 4th?

Whichever party emerges victorious from the polls in early July, the perennial focus on lowering inflation, while understandable, must be replaced by actual, tangible relief for businesses. After all, inflation is now within a hair’s breadth of the Bank of England’s 2% target - but increases to business rates, income tax and fuel duty are projected to raise taxes by over £20bn in the next 5 years (£800 per household).

Whatever pledges the next government has, targeted support to reinvigorate the nation’s forsaken high streets while incentivising community-centric spending (as opposed to online purchasing) would be a welcome change. Until that time, I’d strongly suggest that businesses prioritise their payroll projections to stay ahead of impending wage changes and take care to reduce their tax liability where possible.

If you’re looking for tax advice or would like to find out more about how we can help, get in touch with our team of tax experts today.

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