2024 General Election Tax Predictions

During the 2022/23 fiscal year, the tax burden—which refers to the UK’s tax revenue as a percentage of gross domestic product (GDP)—was the highest it’s been since 1949, hitting 36.3%. Despite falling slightly to 36% in 2023/24, this figure still represents the highest tax burden since the 1950s.

Ahead of the General Election on Thursday 4th July 2024, the major political parties are all making claims that British households will be worse off under the policies of their rivals, but what are the Conservatives, Labour, Liberal Democrats and the Green Party actually planning for taxation if they win next month’s election?

What are the major UK political parties’ tax policies?

Below, we take a look at the manifestos of the four main political parties and pull out the tangible policies that will impact tax policy in the years ahead.

Conservatives

The Conservative Party has held the keys to Downing Street since 2010 but, if polls are to be believed, they look set to lose heavily next month.

In a bid to win back voters, the party is offering a manifesto full of tax cuts, with five big tax pledges:

1. To cut employee National Insurance (NI) from 8% to 6%
2. To abolish NI for the self-employed
3. To guarantee that the state pension remains below the threshold for paying income tax
4. To raise the threshold at which families pay the child benefit tax charge from £60,000 to £120,000
5. To abolish stamp duty for first-time buyers on homes up to £425,000

In total, this amounts to £17.2bn of tax cuts, which the Conservative Party says will be raised by reducing the welfare bill by £12bn a year, and generating an additional £6bn a year by cracking down on tax evasion and avoidance.

Labour

Sir Keir Starmer is widely expected to enter 10 Downing Street following next month’s General Election.

The shadow chancellor Rachel Reeves has criticised the tax cuts offered by the Conservatives, but the Labour Party manifesto doesn’t contain many tax increases. They have confirmed corporation tax will remain at 25%, council tax bands will remain as they are currently, while income tax and National Insurance rates will not be increased.

However, Labour has pledged to start levying VAT on private schools (which up to now have been exempt), institute a windfall tax on oil and gas giants and close various tax avoidance and non-domicile loopholes.

Liberal Democrats

You have to go back to the 1918 General Election for the last time a prime minister was elected that wasn’t the leader of the Conservative Party or Labour Party—the Liberal Party’s David Lloyd George—and the 2024 General Election will almost certainly be no different.

At the time of writing, the Liberal Democrats are polling in fourth place behind Reform UK. However, in the event that Labour returned the most MPs but without an outright majority, the Lib Dems could still hold influence, making it important to take a look at their plans for taxation.

The party has pledged to reform Capital Gains Tax in a bid to raise £5bn for the NHS, with plans to close loopholes ‘exploited by the super wealthy’. They also claim to be able to raise £7bn by cracking down on tax avoidance through investing £1bn in HMRC.

The Lib Dems also plan to reverse the Conservative tax cuts for the big banks, restoring the Bank Surcharge and Bank Levy to 2016 levels in real terms, while also introducing a 4% tax on the share buyback scheme of FTSE-100 listed companies.

On income tax, the party has promised to keep the freeze on tax thresholds in place. Currently, these are frozen until 2028.

Green Party

The Green Party has never returned more than one MP during a UK General Election, and the party hasn’t polled above 7% in the last three years. However, should the Greens defy expectations and be able to wield any influence at all, their manifesto contains a number of tax policies.

First of all, they’ve pledged to implement an annual Wealth Tax of 1% on individuals with assets over £10 million, and 2% on assets over £1 billion.

The party also wants to increase National Insurance contributions for individuals earning above the Upper Earnings Limit. Someone earning £55,000 per year would pay an additional £5.46 a week, while someone earning £65,000 per year would pay approximately £17 a week more.

Another big tax pledge from the Greens is to introduce an economy-wide carbon tax on any activities that produce carbon dioxide, including airlines.

How Warr & Co can support your tax planning

Here at Warr & Co we’ve been helping businesses and individuals with their tax planning for many years, and offer a wide range of services to ensure your affairs are as tax efficient as possible.

If you’re a sole trader, partnership or a company we can support you with producing end of year accounts, act as your agent with HMRC, as well as provide advice and guidance on your VAT obligations. We can also ensure your business is compliant with the new Making Tax Digital (MTD) legislation.

For individuals looking to better organise their tax affairs we can help you with a variety of services that cover everything from Capital Gains tax and Inheritance tax, through to pension contributions and non-UK domicile taxation.

To find out more about how the experienced team at Warr & Co can improve your tax planning, why not get in touch today. Alternatively, book your free, no obligation tax planning consultation by following this link.