2023 Party Conference Season has finished – were there any early signs of future changes?
October 17, 2023
The introduction of fixed term parliaments means that we know there will be a General Election next year (with the signs that the current government will wait as long as possible to call the election, hoping for inflation to be back down towards the desired 2% levels).
While one can never be sure that statements made for political reasons will become reality in the future, it is a useful exercise to review what is being said in order to see whether there are general trends occurring.
The main trend would appear to be that tax cuts are not on the horizon, irrespective of which party (or, indeed, parties) might come to power. However, by the same token, there also does not appear to be a desire to increase the tax burden on the general population directly – with increases in tax revenue coming from other suggested sources including more efficient tax collection, a windfall tax on energy companies, VAT on private school fees and the removal of the “non-dom” tax status.
A frequent worry amongst entrepreneurs and those working in growth companies is that the rate of capital gains tax (“CGT”) will be equalised with income tax rates – creating a disincentive to take the risk (and often lower remuneration) for working in these types of enterprise. However, the Conservatives and Liberal Democrats appear to be silent on this point and Labour’s Shadow Chancellor has said:
“We don’t plan a wholesale equalisation of income tax and capital gains. We think it is important to create the incentives to invest in UK businesses, to help create businesses, to help grow businesses, and to have preferential tax treatment in doing that.”
Whilst such a stance should help put most businesses at ease, the careful use of the word “wholesale” does leave the door open for a challenge to those in Private Equity and the potential; reclassification of Carried Interest. Such a change would, no doubt, be popular within the party itself, but it is interesting that the Shadow Chancellor did not comment on it – potentially due to it being at odds with her overall “pro-business” rhetoric.
We will continue to keep abreast of the situation, with an update planned next year once the party manifestos are produced.
Should you want someone to help you explore your thinking on this issue, please contact Stuart James in the first instance.