How will the new government affect your tax bill?
Following last week’s Labour landslide, today we take a look at the potential effects on your tax bill. Plus, good news as the economy grew more than expected between January and March, and we provide information for the UK’s veterinary surgeons on transitioning to the new Special Import Certificate (SIC) digital service.
Election results in: What will be the effect on your tax bill?
So, the election results are in and the Labour party won the country’s mandate to form a new parliament. What could that mean for the tax you pay?
Will there be an emergency budget?
Labour will likely set out their initial plans in an ‘emergency’ budget. This is unlikely to happen before September or October as the Office of Budget Responsibility (OBR) will need 10 weeks to prepare independent forecasts on the plans.
Further details will no doubt emerge over coming weeks, but here’s a review of what looks likely in the main tax areas based on their manifesto.
Income tax changes
- No increase to income tax rates.
- Pension reforms are planned.
- No mention has been made about the tax-free allowance.
National Insurance Contributions (NIC)
- A promise has been made not to increase employees’ NIC.
Business tax
- A roadmap for business taxation will be published in coming weeks.
- Full expensing and the Annual Investment Allowance will be kept. Some further details to come that should clarify the qualification criteria.
Corporation tax
- Corporation tax to be capped at the current main rate of 25% (paid by companies with profits of £250,000 and over) for the whole of the next parliament. This may hint that there are increases to come for companies benefiting from the small profits rate or marginal relief.
VAT
- No increase to the VAT rate.
- VAT will be applied to private school fees.
Capital Gains Tax (CGT)
- Nothing has been specifically mentioned on CGT rates or reliefs.
- The ‘carried interest tax loophole’ will be closed. This mainly affects private equity executives who receive a stake in the funds they manage rather than traditional remuneration.
Inheritance tax
- No expected changes to current rates or reliefs.
- The use of offshore trusts to avoid inheritance tax will be ended.
Stamp duty land tax
- The existing surcharge on purchases of residential property by non-UK residents will increase from 2% to 3%.
- Perhaps this hints that further down the line there will be increases for UK residents too.
If any of these changes affect you in any way, please contact us and we will be pleased to give you personalised advice. As your tax advisers, we will continue to keep you up-to-date on tax changes so that you can plan your affairs to minimise paying tax.
Economy growth higher than estimated
Figures released by the Office for National Statistics (ONS) show that the economy grew by 0.7% between January and March. This is higher than their initial estimate of 0.6%, and means that the country’s emergence from recession was stronger than expected.
These figures mean that the UK experienced the fastest growth of the G7 economies in this first quarter of 2024. It is also the highest growth in a quarter since 2021 and bodes well for the economy as a whole over coming months.
Increases in GDP are seen as positive because it usually means that more money is being spent, with its desirable knock-on effects to jobs being created, better pay rises for workers, and increased tax take for the government.
See: https://www.bbc.co.uk/news/articles/c6p2r9xzde4o
Important update for veterinary surgeons: Transition to new Special Import Certificate (SIC) digital service
Starting 15 July 2024, all Special Import Certificate (SIC) applications must be submitted through a newly launched digital service. This change follows the introduction of the new special imports digital service in January 2024, designed to enhance ease of use, security, reliability, and accessibility.
Key points for UK veterinary surgeons who hold and supply imported medicines:
- The old online special import scheme will be decommissioned on 15 July 2024.
- If you have not yet registered for the new digital service, it is essential to do so before this date.
- Post 15 July 2024, SIC applications will only be accepted via the new digital service.
For wholesale dealers:
- A new digital service for applying for Wholesale Dealer Import Certificates (WDICs) will also be available from 15 July 2024.
- This service is for dealers who hold and supply imported medicines to valid import certificate holders.
Veterinary professionals and wholesale dealers are encouraged to transition to the new system promptly to ensure uninterrupted access to the necessary certificates.
For further information and a helpful video, see: https://www.vmdconnect.uk/new-import-service
Funding competition for cluster management project in Mid and North Wales
A funding competition is open to all UK businesses to apply for up to £150,000 for a project to develop and manage the agri-tech and food technology innovation cluster in Mid and North Wales.
The competition is open to both single applicants or collaborations.
To apply, your business needs to:
- be a UK-registered business of any size, an academic institution, a research and technology organisation (RTO), or a not for profit or public sector organisation.
- Carry out its project work in the UK, and have impact in the agri-tech and food technology innovation cluster in Mid and North Wales.
The competition is already open and closes on 10 July 2024 at 11am.
For details on what the proposal needs to contain and how to apply, please see: https://apply-for-innovation-funding.service.gov.uk/competition/1972/overview/647c9795-dda7-4d2e-9e55-9f6a165a337e#scope