It is fair to say that the news of an election on 4 July was a surprise, as most were expecting it to be later in the year (October had been predicted).
What does this mean for individuals and their tax position?
For those who were looking to restructure their affairs ahead of a new (Labour?) Government this does give them much less time to get any changes implemented. Anyone in this situation should be taking advice now as to the action to take.
For others, the election should be helpful. Why do I think that? Because it should give us a much better insight into what the future tax position may be.
Each political party has now published their manifesto, which summarises what their policies will be and how this will be funded. Each are being carefully scrutinised allowing us to have a much better insight into what the new Government will mean and what tax changes are likely to occur.
With all the main parties ruling out an increase to Income Tax, National Insurance Contributions and VAT it does raise questions as to where additional revenue will come from.
The failure to rule out a change in the level of capital gains tax does suggest that this tax may be vulnerable to rising under a new Government (with only the Liberal Democrats being clear in their manifesto that they would raise it, broadly aligned to the rates of income tax). Those individuals contemplating selling assets may consider bringing those plans forward, where possible, to ‘bank’ the current capital gains tax rates.
Whilst most of the parties wish to avoid an unpopular tax increase, the implications of this are that the changes are likely to be felt through the freezing of thresholds and the reduction or restriction of reliefs that are currently available.
Anyone concerned about the impact on their business or personal tax affairs should get in touch with their usual PEM contact to discuss their position and concerns.
This article was updated 17/06/2024.
