UK General Election | Outcome and Implications

The UK General Election results are in and as many suspected, Labour have won in a historic landslide. They will form the next government with Sir Keir Starmer as the next Prime Minister.

It’s been fourteen years since the UK has had a change in its governing party. This shift in power will no doubt lead to policy changes across the spectrum.

In the lead up to polling day, Labour set out clear priorities for their first hundred days in office and beyond through their party manifesto. We’ve summarised the key areas of the new government’s policy agenda that may affect, and have implications for, the world of financial planning once Labour have settled into Number 10.

Labour has promised not to change Income Tax rates which currently sit at 20%, 40% and 45%. Rate bands and allowances are also not scheduled to change until April 2028, meaning that the new government will likely benefit from fiscal drag as more people move into higher tax bands over time.

IHT is not set to change, however following on from the Conservatives March 2024 Budget, Labour will continue to tighten the area of non-domiciled individuals and the use of offshore trusts.

Labour have stated they will no longer reintroduce the lifetime allowance and will not change the tax free element of pension income.

Labour have no plans to change the core rates of employee National Insurance Contributions (NIC), employment NIC or self-employed NICs following the recent cuts by the Conservatives.

Labour has vowed not to change the core rate of VAT but do plan to make private schools subject to VAT and business rates.

We’ll be watching how the first hundred days of this new Labour government plays out with interest.

Labour’s new policy agenda, including various tax changes, may have implications for your personal finances depending on your situation. In this time of change the need for good financial planning advice is as important as ever.

The change in government may be an opportunity to revisit your financial plan and ensure you make use of allowances available to you.

 

Important information

Please note that any tax benefits will depend on your personal tax position and rules are subject to change. The value of investments can go down as well as up, and you may get back less than you invested.