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General Election 2024: Where do Labour and the Conservatives sit on tax?

By RJP LLP on 6 June 2024

Now that political campaigning is well underway, it’s an opportunity to consider what the two main political parties, Labour and the Conservatives, are pledging when it comes to tax policy.

The Labour Party has released its tax plans in a detailed document Labour Party tax policy: How we will make the tax system fairer, which highlights key policies. These include VAT on private school fees, a windfall tax for energy company profits and additional measures for non-doms, as we have discussed previously. The party has lots of other plans to reform the system.

This article outlines what these two political parties have said to date about their intentions for tax policy in the key areas of personal tax, VAT, corporation tax, capital gains tax and IHT.

1. National Insurance and Income Tax Policy

Conservatives promise no ‘official’ tax increase

The Conservatives have pledged that there would be no increases whatsoever to income tax or national insurance for the duration of the next Parliament. This includes no changes to personal allowances for income tax, which will stay frozen at current rates until 2028. As we have highlighted previously, they have already increased income tax in real terms. Freezing the personal allowances for such an extended period - especially given rates of inflation - is another form of increased taxation by stealth. This occurs because of fiscal drag.

Conservatives plan new ‘pensions triple lock plus’

There are plans for pensioners to be treated slightly differently to other taxpayers under the Conservatives. Both Labour and the Conservatives plan to maintain the pensions ‘triple lock’. This means that state pension levels will rise in line with the higher of either average earnings, inflation, or 2.5%. The state pension already increased by 8.5% in April 2024, fuelled by strong wage growth last year.

Now the Conservatives have pledged an additional ‘triple lock plus’ policy. This would have the effect of ensuring that the personal tax allowance for pensioners would increase every year, so it rises in line with the state pension. It is designed to ensure that pensioners are not pushed into paying tax on their state pension.

Conservatives pledge to fix personal allowance erosion for highest earners

The Conservatives have pledged to tackle the distortions that impact income tax at the marginal rates for certain taxpayers because their earnings mean they do not benefit from a personal allowance at all. For instance, people earning between £100,000 and £125,140 pay an effective rate of 60% tax on their earnings between these amounts, due to the erosion of their personal allowance within this band.

Another Conservative policy is to abolish national insurance completely ‘when affordable to do so’. Jeremy Hunt has already cut national insurance (NI) twice. Employee NI was reduced from 12% to 8% in the last Budget.

Labour pledges not to increase personal taxes beyond current rates

Labour promises a similar approach to income tax and NICs by maintaining current rates and the freezes to personal allowances.

Is Labour planning to tax pensions?

Controversially in the televised debate between Rishi Sunak and Sir Kier Starmer on ITV, Labour was accused of having plans to introduce a tax on pensions. Looking at the detail of its policies, there does not appear to be a separate plan to specifically add a new pension tax. However, Labour is not pledging the same triple lock plus policy, so if the personal allowance for pensions is not increased, the same fiscal drag effects seen with income tax will apply automatically. This means larger pension pots will be taxed without them having to do anything.

As published in its manifesto, Labour has also pledged to reinstate the lifetime allowance (LTA) for pensions which was abolished by Jeremy Hunt in the last 2023 Budget. The LTA had previously capped the amount people could have in their pensions without incurring additional tax charges, at £1,073,100. Of course, it is possible that Rishi Sunak was also referring to this when he talked about a pensions tax, since a sizeable proportion of taxpayers will have built up £1 million plus pension pots.

2. Plans for other personal taxes

What will happen to Inheritance Tax?

The Conservatives have not promised any changes to inheritance tax in the short term but have indicated that reducing IHT is “something that the Conservative Government could look at over time”. There have been many hints that rates of IHT would be reduced in recent Budgets, with nothing materialising yet.

Labour has not mentioned any plans to change inheritance tax in its policy proposals, however we can expect this will be on the cards in the future.

Changes to Capital Gains Tax

Jeremy Hunt has promised not to increase capital gains tax (CGT) based on the rationale that the Conservatives “want to encourage people to earn and save”. However, whilst they have not increased the actual tax rates, they have significantly cut the annual exemption for capital gains to the current level of £3,000, which is in effect a tax increase in every sense without having to change the headline rate.

Will Labour create a combined income and capital gains tax?

Labour has declared a policy to simplify tax and although no specific details have been announced, what is most likely to happen is for capital gains to be treated in the same way as other forms of income and taxed accordingly. For instance, higher rate taxpayers currently pay 40% tax on income above £50,271, 24% per cent on capital gains on property and 20% on gains from shares. Labour could potentially raise CGT rates to match income tax rates.

Policies to change Stamp Duty

Although nothing specific has been announced, the Conservatives have suggested they would be looking to permanently reduce stamp duty land tax (SDLT) on the most expensive properties. Labour has not talked specifically about stamp duty changes.

When could the next Budget take place?

If the Conservatives maintain power, it will be interesting to see if the policies they unveiled in the last Budget regain momentum. For instance, the proposals to overhaul non-dom tax and the plans to remove tax advantages for furnished holiday lets.

If Labour were to win the election on 4 July, the earliest date a Budget could take place is the beginning of September 2024. This is because Labour has stated it would wait for an independent forecast from the Office of Budget Responsibility (OBR) before making any firm policy decisions and the OBR requires 10 weeks’ notice to produce its forecasts.

3. Business taxes and business tax reliefs

Conservative and Labour plans for VAT policy

Both Labour and the Conservatives have indicated they would not change the main rate of VAT. Labour has been promoting its policy to end tax breaks for private schools, for example by removing exemptions to VAT on tuition fees and the business rate exemption available for private schools.

Corporation tax and new business boosting tax policies

It was the current government that recently increased corporation tax to 25% for companies generating profits in excess of £50,000. This has been a highly controversial policy, given that it was a 6% increase on the previous 19% rate. The Conservatives have not declared any plans to further increase this or to reduce the rate if they remain in power. Instead, they are now indicating that they would offer new business tax policies to boost investment, suggesting more tax relief could be available, but no details are available yet.

Labour plans to maintain R&D tax credits

Labour has also pledged to maintain the main rate of corporation tax at 25% and to continue offering business tax reliefs like R&D tax credits, the annual investment allowance (AIA) and full expensing for capital allowances. They have not mentioned any additional business tax incentives.


We will be monitoring all the pledges being made by Labour and the Conservatives in the run up to the election and writing articles about tax related policy as it is announced.

In the meantime, if you would like to discuss your tax planning strategies or need specific advice about tax, please contact us via


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