The Conservatives published their 2024 General Election Manifesto on Tuesday 11th June, titled “Clear plan, bold action, secure future”. The manifesto explains that this will be “a future where hard work and doing the right thing is always rewarded, not punished with higher taxes and hidden green levies”. From a tax perspective it is primarily a manifesto for working people, as opposed to those whose income comes from savings and investments.
The manifesto does not contain much in the way of tax surprises. This might be expected from the governing party over the last 14 years which could also control the timing of the election and any policies trailed in the run up to it.
Many of the tax pledges from the manifesto are focussed on keeping existing reliefs and rates, with a view to continue cutting taxes as finances allow. Despite speculation, the only inheritance tax commitments are to retain two reliefs.
A separate costings document has also been published, which has rounded figures to the nearest billion for cost savings from welfare reform and the "tackling (the) tax gap” and more precise figures for the costs of the tax cuts and other spending measures.
The flagship policy is national insurance cuts. The Conservative Party’s announced aim is to abolish “double tax on work” altogether, when financial conditions allow. This is likely to refer to national insurance paid by employees and the self-employed, but may not extend to employers’ national insurance contributions. This ties in with the substantial cuts to national insurance made over the course of Rishi Sunak’s Government.
The additional 2% cut to the main rate of employee national insurance contributions will mean that this rate will have halved between January 2024 and April 2027, from 12% to 6%. No mention is made of any changes to the 2% rate, which applies to earning over £50,270.
The abolition of the main rate of national insurance contributions for the self-employed by April 2029 is a surprise. The rate is currently 6% on earnings between £12,570 and £50,270, having been cut from 9% in April 2024. Again, there is nothing to suggest that the 2% rate on earnings about £50,270 will not be retained, so this is not a total simplification. It builds on the abolition of Class 2 national insurance contributions, which were £3.45 per week but were abolished in April 2024.
The self-employed have historically paid lower rates of national insurance than employees, justified by their lesser entitlement to rights and protections. Following the support given to the self-employed during the pandemic, the then Chancellor Rishi Sunak indicated that there could be a justification for aligning the rates. However, the complete abolition of the main rate of self-employed national insurance by 2029, while for employees it remains at 6%, is a move in the other direction.
Investors and landlords do not benefit from reductions to national insurance contributions, while most likely seeing their tax liabilities increasing with frozen allowances and thresholds. Retirees also do not generally benefit from national insurance cuts, but will still see a benefit under the new age related personal allowance.
Manifesto pledges on personal tax policies include:
The Conservatives have pledged to be the party of business, with a tax system that incentivises business at the heart of their economic plan. With businesses looking for certainty and stability, a commitment not to raise corporation tax or VAT rates will be welcome. The current business rates system has faced increasing criticism for failing to keep pace with changes including the increase in online retailers, and so while measures that aim to re-level the playing field will be welcome, businesses with a physical presence may like to see far more extensive reform.
Manifesto pledges on business tax include:
Currently, first time buyers pay no stamp duty land tax on properties worth up to £425,000. In 2022, the threshold was temporarily increased, with it due to revert in April 2025 to the previous £300,000 threshold. This temporary £425,000 threshold has now been made permanent.
General manifesto tax pledges include:
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By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication.
Tax legislation is that prevailing at the time, is subject to change without notice and depends on individual circumstances. You should always seek appropriate tax advice before making decisions. HMRC Tax Year 2024/25.
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