General election: What does it mean for tax?

What we know so far on the party’s tax policies

Conservatives

Propose abolishing individual national insurance contributions, though the high cost makes this a long-term goal.

National insurance cuts over the past year have increased take-home pay, but fiscal drag from frozen tax thresholds has offset these benefits, leading to higher taxes due to inflation. Chancellor Jeremy Hunt aims to further reduce National Insurance Contributions (NICs), potentially increasing take-home pay for some. However, the International Monetary Fund’s warnings make these plans uncertain.

The Tories plan to phase out the non-domiciled tax regime, potentially impacting some individuals’ tax liabilities.

Current income tax rates and bands are likely to remain unchanged.

Labour

Plans include extending taxes on non-domiciled individuals, applying VAT to private education, and changing the tax treatment of carried interest for investment managers.

Labour’s policies suggest there would be no changes to income tax rates or bands and no increases in capital gains tax. It has also been reported that corporation tax may be capped at 25% for the whole of the next Parliament and there would be a focus on tax avoidance.

Post-Election landscape

The incoming government’s tax and spending plans may become clearer with a possible early September Budget. A Spending Review due by November will address financial obligations, including compensation and potential bailouts. The next OBR Economic and Fiscal Outlook will pose significant challenges for the new Chancellor.