Election Manifestos: A Business Perspective

With the UK’s general election imminent, the main political parties have outlined their visions for the future, presenting pledges that could significantly impact businesses. From tax policies to regulatory changes, here is a summary of what businesses need to know about each party's manifesto.

Labour’s vision

Boosting innovation and economic stimulus 

To stimulate the economy and support innovation, Labour proposes enhanced R&D credits to encourage investments in new technologies and processes. Its proposed National Wealth Fund will invest £7.3bn in projects aimed at economic stimulation and the green transition. Labour also plans to reform the British Business Bank to better support SMEs across the UK.

Fair taxation and loophole closure 

Labour’s manifesto emphasises fairness in the tax system, ruling out increases in income tax rates, national insurance, and VAT, but keeping the door open for changes to capital gains tax, inheritance tax and pension tax relief. The party plans to cap corporation tax at 25% and maintain a permanent full-expensing system for capital investments and the annual investment allowance for small businesses. Additionally, Labour intends to publish a comprehensive business taxation roadmap for the next parliament. The previously discussed reform of the non-domicile regime and VAT on private school fees remain pledges of the party.

Creating a pro-innovation regulatory framework 

The establishment of a Regulatory Innovation Office is proposed to streamline regulatory processes, update regulations, and accelerate approval timelines. Despite previous proposals, audit reform to increase transparency in financial reporting is not mentioned in the current manifesto.

Addressing wage and pension inequality 

Labour commits to extending the National Living Wage to workers aged 18-20 and ensuring it is a genuine living wage. Additionally, the party plans to review and reform the pensions landscape to enhance outcomes for workers.

Enhancing trade relationships 

Labour’s manifesto calls for a comprehensive trade strategy to improve UK businesses' access to international markets. Although committed to remaining outside the EU, Labour aims to improve trade relations with the EU and secure mutual recognition agreements for professional qualifications.

Conservative proposals

Focus on tax reduction 

The Conservative manifesto centres on tax reductions and a commitment not to increase the rates of the main taxes. Key proposals include abolishing the main rate of National Insurance for the self-employed, reducing rates for other employees, no new taxes on pensions, no increase in capital gains tax, review of the VAT registration threshold and a two-year temporary capital gains tax relief for landlords selling to existing tenants.

Tackle tax avoidance and evasion

The party plan to raise a further £6 billion by tackling tax evasion and avoidance.

Reducing regulatory burdens 

A significant aspect of the Conservative plan is reducing regulatory burdens. The party proposes increasing the employee threshold for reporting requirements to save small businesses administrative work and aims to reform over half of the EU laws inherited by the UK by July 2026, potentially saving businesses £1bn.

Supporting local growth and innovation 

The Conservatives emphasise supporting local growth through regional mutual banks and a £4.3bn business rates support package over five years. Public R&D spending is set to increase to £22bn, fostering innovation and maintaining the UK’s global competitiveness.

Pragmatic approach to green goals 

The Conservatives remain committed to achieving net zero emissions by 2050 but promise no new green levies or charges, easing the financial burden on businesses while promoting sustainability.

Enhancing pensions and apprenticeships 

The party plans to introduce the pensions triple lock, ensuring annual pension increases. Additionally, they aim to address the talent gap by creating 100,000 new apprenticeships in England during the next parliament by reducing the amount of underperforming university courses.

Other party pledges

Liberal Democrats 

The Liberal Democrats advocate for rejoining the EU’s single market and propose significant changes to corporation tax, including higher levies on banks and a reformed capital gains tax regime. They also plan to introduce a national financial inclusion strategy and require regulatory bodies to better support vulnerable consumers.

Green Party 

The Green Party promises £40bn annually in green investment and a carbon tax to drive the green economy. They would continue the windfall tax on energy companies and introduce a similar tax on banks benefiting from high interest rates. They also plan to introduce a wealth tax for those with assets above £10m and align capital gains tax with income tax rates.

Reform UK

Reform UK focuses on creating a high-wage and low-tax economy. For companies, they plan to reduce the rate of corporation tax, introduce a small profits threshold for corporation tax of £100,000, and raise the VAT threshold to £150,000. For individuals, they plan to abolish IR35 rules, increase the personal allowance threshold to £20,000 and abolish inheritance tax for estates under £2m. 

What does this mean for you?

A government is not legally held to its manifesto or required to stick to the promises they have made. Circumstances change, and even a fully intentioned promise made now may or may not be suitable in 2029. So, while it’s reasonable to think that at least some pledges will turn into reality, there is no guarantee.

Regardless of the election outcome, we are here to support you.  Following the election and the announcement of any budget, we’ll let you know, and we’ll be happy to provide you with personalised advice. 

Disclaimer:

Document for guidance only. Whilst we take care to ensure the accuracy of this document, no responsibility for loss occasioned by any person acting or refraining from action as a result of this information can be accepted by the authors or firm.