Manifesto tracker

Taxation

All Mission pledges

  • Economic Growth, Kickstart economic growth, Policy area, Taxation

A roadmap plan outlining the Government’s intended changes for business taxation for the duration of the 2024-29 Parliament will be published to give clarity to businesses.

Manifesto Section

Policy Area

Government Department

Accountable Minister

HM Treasury
Rachel Reeve

Commitment

Publish a roadmap for business taxation

What Does It Mean For the UK?

Why > Publishing a clear and comprehensive roadmap for business taxation would provide businesses with the certainty they need to plan long-term investments. Uncertainty over future tax policies can deter investment, limit economic growth, and create a volatile business environment. The roadmap would outline tax rates, allowances, and any planned changes, allowing businesses to strategize effectively. Germany, which maintains a stable and predictable corporate tax policy, has seen steady growth and investment from both domestic and international businesses. What Success Means > Increased Business Investment and Economic Growth > With a clear understanding of future taxation, businesses can plan more confidently, leading to increased capital investments, job creation, and economic growth. Greater Market Confidence and Stability > Predictability in tax policy would enhance market stability, reduce the risk of sudden policy changes, and make the UK more attractive for both domestic and foreign investment.
  • Economic Growth, Kickstart economic growth, Policy area, Taxation

Corporation Tax will remain at 25%, and will only change of other countries lower theirs and pose a risk of UK corporations moving overseas due to a possibly uncompetitive UK taxation rate in the future.

Manifesto Section

Policy Area

Government Department

Accountable Minister

HM Treasury
Rachel Reeve

Commitment

Cap corporation tax at 25%, unless other G7 countires lower theirs below

What Does It Mean For the UK?

Why > Labour’s commitment to capping corporation tax at 25%—currently the lowest in the G7—would make the UK a competitive destination for business investment. High corporation tax rates can deter investment, as businesses look for more favorable environments. Maintaining a competitive tax rate would help retain and attract businesses, supporting economic growth. Countries like Ireland have leveraged low corporate tax rates (12.5%) to attract multinational companies, driving significant economic growth. What Success Means > Maintained or Increased Foreign Direct Investment (FDI) > By keeping corporation tax at a competitive level, the UK would continue to attract FDI, supporting economic growth, innovation, and job creation. Enhanced Global Competitiveness > A capped corporation tax rate ensures the UK remains competitive globally, preventing companies from relocating to countries with more favorable tax environments. This policy would act as a buffer against economic shocks and global tax competition.
  • Economic Stability, Policy area, Strong foundations, Taxation

HMRC will be reformed and modernised to improve its efficiency to reduce the amount of money lost to tax avoidance.

Manifesto Section

Policy Area

Government Department

Accountable Minister

HM Treasury
Rachel Reeves

Commitment

HMRC to tackle tax avoidance

What Does It Mean For the UK?

Why > The avoidance tax gap is estimated to be £1.8 billion in the 2022 to 2023 tax year (GOV.UK). Labour’s plan to modernize HMRC with new technology and powers aims to tackle the £35 billion annual tax gap in the UK. Enhanced measures for registration, reporting, and enforcement, similar to those in Australia, would make it harder for companies and individuals to avoid taxes. What Success Means > Success would mean a reduction in the tax gap, increased revenues for public services, and a more equitable and efficient tax system. It would also deter tax evasion and create a fairer economy.
  • Economic Stability, Policy area, Strong foundations, Taxation

Offshore trusts to avoid inheritance tax will be abolished to make sure all those eligible to pay inheritance tax will do so.

Manifesto Section

Policy Area

Government Department

Accountable Minister

HM Treasury
Rachel Reeves

Commitment

No more inheritance tax avoidance via offshore trusts

What Does It Mean For the UK?

Why > HMRC statistics show that approximately one in ten people in the UK have an offshore financial interest. Wealthy individuals can avoid taxes on overseas income, costing the UK tax revenue a great deal. Labours policy to end the use of offshore trusts aims to ensure that everyone pays their fair share of taxes. Similar measures in countries like France have resulted in higher tax revenues. What Success Means > Success would result in increased tax revenues, improved fairness in the tax system, and greater public trust in economic policy. It would also discourage tax avoidance and promote social responsibility among wealthy individuals and corporations.
  • Clean Energy, Make Britain a clean energy superpower, Policy area, Taxation

The 29% investment allowance for qualifying expenditure will be removed on or after 1 November 2024. This means businesses will no longer receive tax relief on certain investments, which can impact their financial planning and investment strategies.

Manifesto Section

Policy Area

Government Department

Accountable Minister

HM Treasury
Rachel Reeves

Commitment

Eliminate the 29% investment allowance for qualifying expenditures on or after November 1, 2024.

What Does It Mean For the UK?

Why > The government may implement this change to increase tax revenue and simplify the tax system. By removing the allowance, they could aim to create a more level playing field for businesses and potentially redirect funds toward other priorities, such as public services or infrastructure. What Success Means > Success would involve businesses adjusting to the new tax structure without significantly impacting their investment levels. Ideally, this change would lead to a more streamlined tax system that generates additional revenue for the government while encouraging sustainable business practices.
  • Economic Stability, Policy area, Strong foundations, Taxation

The Chancellor will not increase National Insurance, the basic, higher, or additional rates of Income Tax, or VAT during the 2024-29 Parliamnent.

Manifesto Section

Policy Area

Government Department

Accountable Minister

HM Treasury
Rachel Reeve

Commitment

no increase to National Insurance, the basic, higher, or additional rates of Income Tax, or VAT.

What Does It Mean For the UK?

Why > Labour’s commitment to not increasing National Insurance, Income Tax, or VAT would provide economic stability and predictability for businesses and households. This approach aims to stimulate economic growth by maintaining disposable income levels. What Success Means > Success would mean sustained economic growth, higher consumer confidence, and more significant investment in the UK economy. It would also support social equity by not increasing the tax burden on lower and middle-income families.
  • Economic Growth, Kickstart economic growth, Policy area, Taxation

The current system of ‘full expensing’, a 100% first-year allowance which allows companies to claim a deduction from taxable profits that is equal to 100% of their qualifying expenditure in the year that expenditure is incurred, will be retained..

Manifesto Section

Policy Area

Government Department

Accountable Minister

HM Treasury
Rachel Reeves

Commitment

Retain a permanent full expensing system for capital investment and the annual investment allowance for small business.

What Does It Mean For the UK?

Why > Retaining a permanent full expensing system allows businesses to deduct the cost of capital investments (e.g., machinery, equipment) from their taxable profits immediately. The annual investment allowance for small businesses provides similar benefits for smaller-scale investments. These incentives encourage businesses to invest in productivity-enhancing capital, drive growth, and remain competitive. The United States has a similar expensing policy under the Tax Cuts and Jobs Act, which has been credited with boosting business investment. What Success Means > Higher Business Investment and Productivity > The full expensing system would encourage businesses to invest in new technology and equipment, leading to higher productivity and economic growth. Small businesses would particularly benefit, reducing the upfront cost of expansion and modernization. Support for Innovation and Modernization > By incentivizing capital investments, the policy would foster innovation across various sectors, helping businesses modernize and compete in the global market.
  • Clean Energy, Make Britain a clean energy superpower, Policy area, Taxation

The Energy Security Investment Mechanism., the temporary tax on exceptional profits of oil and gas companies; part of the Energy Profits Levy, will be retained.

Manifesto Section

Policy Area

Government Department

Accountable Minister

HM Treasury
Rachel Reeves

Commitment

Retain the Energy Security Investment Mechanism, intended to attract investments in energy security initiatives, particularly those focused on renewable energy sources and reducing reliance on fossil fuels. For more detailed information about Labour’s energy policies, you can refer to articles from [The Guardian](https > //www.theguardian.com/environment/2023/jul/11/labour-pitches-great-british-energy-plan-with-83bn-funding) and [The Independent](https > //www.independent.co.uk/news/uk/politics/great-british-energy-labour-83bn-b2389040.html).

What Does It Mean For the UK?

Why > In 2019, for the first time, electricity generated from zero-carbon sources surpassed that from fossil fuels. On August 17, renewable energy generation reached an unprecedented level, accounting for 85.1% of total electricity production. This included wind energy at 39%, solar at 25%, nuclear at 20%, and hydro at 1%【source > National Grid】. By keeping this mechanism in place, the government hopes to provide financial backing for projects that enhance energy resilience and security, which is especially important given the current global energy landscape marked by rising costs and geopolitical tensions. What Success Means > This strategy would align with Labour’s broader commitment to building a more sustainable energy infrastructure, creating jobs in green sectors, and ensuring that the UK can meet its climate targets while providing affordable energy to consumers.
  • Clean Energy, Make Britain a clean energy superpower, Policy area, Taxation

The existing Energy Profit Levy of an additional 35% tax on the headline tax rate for oil and gas companies will be increased to 38%.

Manifesto Section

Policy Area

Government Department

Accountable Minister

HM Treasury
Rachel Reeves

Commitment

Iincrease the rate of a specific levy by three percentage points.

What Does It Mean For the UK?

Why > The government may want to implement this increase to generate additional revenue, which can be used to fund public services or specific initiatives. The additional funds could help address pressing issues, such as infrastructure improvements, healthcare, or environmental projects. What Success Means > Success would involve the successful collection of the increased levy without causing significant negative reactions from businesses or the public. Ideally, the increase would lead to improved funding for the targeted initiatives, demonstrating tangible benefits for the community or sector affected by the levy.
  • Economic Stability, Policy area, Strong foundations, Taxation

The existing non-dom status will be abolished and replaced with a new scheme for people who are legitimately only in Britain for a short period to reduce the number of British citizens residing overseas who do not pay UK taxes on their incomes.

Manifesto Section

Policy Area

Government Department

Accountable Minister

HM Treasury
Rachel Reeves

Commitment

Replace non-dom status with new scheme

What Does It Mean For the UK?

Why > The non-dom status allows wealthy individuals to avoid taxes on overseas income, costing the UK around £3.2 billion annually. Labour’s policy to abolish non-dom status and end the use of offshore trusts aims to ensure that everyone pays their fair share of taxes. Similar measures in countries like France have resulted in higher tax revenues. What Success Means > Success would result in increased tax revenues, improved fairness in the tax system, and greater public trust in economic policy. It would also discourage tax avoidance and promote social responsibility among wealthy individuals and corporations.
  • Clean Energy, Make Britain a clean energy superpower, Policy area, Taxation

The pre-existing sunset clause in the Energy Profits Levy of 31 December 2025 will be extended to end of the 2024-2029 Parliament. . The sunset clause typically means that the levy is temporary and will automatically expire unless renewed.

Manifesto Section

Policy Area

Government Department

Accountable Minister

HM Treasury
Rachel Reeves

Commitment

Extend the “sunset clause” associated with the Energy Profits Levy until the end of the next parliamentary session.

What Does It Mean For the UK?

Why > The government may want to extend this levy to continue taxing excess profits from energy companies, particularly in response to rising energy prices and profits during times of crisis. This extension could help generate revenue to fund public services or support for families struggling with energy costs. What Success Means > Success would mean effectively maintaining the levy, ensuring compliance from energy companies, and using the generated funds to support public initiatives. Ideally, the extension would also help balance the energy market, ensuring fair pricing for consumers while still allowing companies to operate profitably.
  • Economic Stability, Policy area, Strong foundations, Taxation

The use of the ‘Capital Gains Tax’ rate for taxing individuals working in private equaity in the private sector will cease to be allowed, meaning performance-related pay is taxed as income at a higher rate than at present.

Manifesto Section

Policy Area

Government Department

Accountable Minister

HM Treasury
Rachel Reeves

Commitment

Performance-related pay in private equity no longer treated as capital gains

What Does It Mean For the UK?

Why > In the UK, carried interest—the share of profits that private equity and hedge fund managers receive from their investments—is taxed at only 28% (the capital gains tax rate), rather than the higher rates applied to ordinary income (Weil Tax). The current system of taxation on private equity allows people to treat performance related pay, such as a work bonus. This loophole does not represent a progressive taxation policy. What Success Means > Success would result in increased tax revenues on individuals with investments in private equity in capital gains. This improved fairness in the tax system, and greater public trust in economic policy. This will promote social responsibility among wealthy individuals and corporations.