As the pre-election polls suggested, the Labour Party will be forming the next UK Government following the 2024 UK General Election. In the noise of the election campaigns, the detail of the Labour party’s tax pledges can be difficult to untangle.
We set out some key highlights from the Party manifesto (and some rumours) of interest to the Island below:
Personal Taxation
Headline pledges to not increase income tax and national insurance contributions notwithstanding, potentially significant personal tax measures have been mentioned in the Labour manifesto, in particular on the following areas:
– Non-dom reforms announced in the 2024 Spring Budget are likely to proceed. At the time of the Budget, Labour signalled their support for the original proposal, noting the following potential changes:
o For offshore trusts settled by UK residents in the scope of UK Inheritance Tax, all foreign assets will be within the scope of UK IHT.
The current proposals suggest assets held in existing excluded property trusts, and in excluded property trusts settled before April 2025, will continue to be excluded for IHT purposes
o There will be no tax discount on remittances made in the first year of the new rules. The current proposals suggest a 50% discount in the first year of the new rules

– No measures have been proposed with respect to IHT aside from the above. Labour have not explicitly supported the high-level proposals to amend IHT raised in the 2024 Spring Budget, however the proposed consultation is expected to proceed.
There are rumours that Labour will consider amending business relief and/or agricultural relief. There may also be change to the IHT on lifetime gifts, removing or altering the current seven-year exemption period.
Any change to IHT is expected to be subject to consultation before introduction.

– Labour plans to change the taxation of carried interest, “closing the loophole” through which such carried interest is subject to CGT at 28%. The rate at which tax will be applied has yet to confirmed and there have been many reports of possible exemptions.
It is hoped there will be a consultation exercise before any measures are introduced.

– No other CGT measures have been mentioned, however potential raises in the CGT rate is rumoured to be an option under active consideration.
Business taxation
No significant business tax measures have been noted in the Labour manifesto. Labour have pledged to leave the current rate of corporation tax unchanged and no changes have been suggested to capital allowances full expensing.
A business tax road map has been promised to provide certainty to business on investment decisions. The road map is expected to include measures supporting the transition to net zero, boosting R&D investment and reforming business rates.
Other measures
Other key headlines include a pledge to increase the SDLT surcharge by 1% (taking this to 3%) on acquisitions of UK residential property by overseas nationals.
The Labour manifesto also pledges an additional 5,000 staff for HMRC to work on reducing the UK “tax-gap”. It should be expected that such additional investigation and enforcement measures will focus to some extent on offshore.
Timelines
The State Opening of Parliament is planned for 17 July, at which the new Government will set out its legislative agenda.
Labour have pledged to have a full OBR report to support any Budget proposals, making an “emergency Budget” following the election unlikely. It is therefore possible we will not see a fiscal event or Budget until the Autumn.
Changes to the UK tax regime are likely, however, and whilst this may not be immediate, it is widely accepted that the new Government will need to raise revenue.