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How Will the UK General Election Affect My Business?

A UK General Election has been called for Thursday 4 July. This raises questions for many business owners about how the policies of the main political parties will affect them. We’ll take a look at what the different UK parties have laid out in their manifestos for small businesses and other related issues. 

Labour

Taxation

  • A Labour Government would not increase National Insurance, the basic, higher, or additional rates of Income Tax, or VAT.
  • Non-dom status would be abolished and replaced with a modern scheme for ‘people genuinely in the country for a short period’.
  • Labour would end the use of offshore trusts to avoid inheritance tax
  • Labour would return to just one major fiscal event a year, which it says would give ‘families and businesses due warning of tax and spending policies’.
  • A roadmap for business taxation would be published for the next parliament which Labour says will allow businesses to plan investments with confidence.
  • Labour will cap corporation tax at the current level of 25 per cent, for the entire parliament, and will act if tax changes in other countries pose a risk to UK competitiveness.
  • A permanent full expensing system for capital investment and the annual investment allowance for small business will be retained, and firms will be given greater clarity on what qualifies for allowances to improve business investment decisions.
  • In England, Labour will replace the business rates system, in order to level the playing field between the high street and online retailers, better incentivise investment, tackle empty properties and support entrepreneurship.
  • Labour would create a National Wealth Fund to promote and support public investment.

Small business

  • Labour would take action on late payments to ensure small businesses and the self-employed are paid on time.
  • They would improve guidance and remove barriers to exporting for small businesses.
  • Labour would reform the British Business Bank, including giving it a stronger mandate to support growth in the regions and nations, which it says will make it easier for small and medium-sized enterprises to access capital.
  • Reforms would be made to procurement rules to give SMEs greater access to government contracts.

Skills

  • A Labour Government would create higher-quality training and employment paths by empowering local communities to develop the skills people need, with employers being put ‘at the heart of our skills system’.
  • Labour would bring forward a comprehensive strategy for post-16 education, and guarantee training, an apprenticeship, or help to find work for all 18- to 21-year-olds.
  • Skills England would be established to bring together business, training providers and unions with national and local government to deliver a highly trained workforce.
  • Skills England will formally work with the Migration Advisory Committee to ensure training in England accounts for the overall needs of the labour market.
  • Adult skills funding will be devolved to Combined Authorities.
  • Further Education colleges will be transformed into specialist Technical Excellence Colleges, and will work with businesses, trade unions, and local government to provide young people with better job opportunities.
  • Labour would reform the Apprenticeship Levy, which it says currently ignore vital skills and training needed to access apprenticeships. It will be replaced by Growth and Skills Levy, with Skills England consulting on eligible courses to ensure qualifications offer value for money.
  • Labour will continue to support the aspiration of every person who meets the requirements and wants to go to university.
  • To better integrate further and higher education, and ensure high-quality teaching, Labour’s post-16 skills strategy would set out the role for different providers, and how students can move between institutions, as well as strengthening regulation.
  • Labour would act to improve access to universities and raise teaching standards.

Economic crime

  • Labour will work allies and international financial centres to tackle corruption and money laundering, including in Britain, Crown Dependencies, and in British Overseas Territories.

HMRC performance

  • A Labour Government would modernise HMRC and change the law to tackle tax avoidance.
  • They would increase registration and reporting requirements, strengthen HMRC’s powers, invest in new technology and build capacity within HMRC in order to close the tax gap.

 

Read the full Labour Party manifesto

Conservatives

Tax and investment

  • Conservatives will look to extend the ‘full expensing’ policy to leasing, once the fiscal conditions allow.
  • A commitment to not raise Corporation Tax, Capital Gains Tax, Income Tax or VAT
  • Conservatives will abolish the main rate of National Insurance for the self-employed entirely by the end of the next Parliament.
  • They will cut employee National Insurance again to 6% by April 2027 – representing a halving from the 12% rate that was in place at the beginning of this year.
  • The abolition of the main rate of Class 4 National Insurance contributions, building on the abolition of Class 2 contributions for self-employed people from April this year.
  • A further £6 billion a year will be raised from tackling tax avoidance and evasion by the end of the Parliament.
  • More Freeports and Business Rates Retention zones will be created and extended to more areas, with details of an application round to be set out in the next Parliament.
  • Conservatives will continue backing Investment Zones across the country, giving areas £160 million to catalyse local growth and investment.
  • A guarantee not to introduce any new green levies or charges.
  • Conservatives will make permanent the increase to the threshold at which first-time buyers pay Stamp Duty to £425,000 from £300,000, which was first introduced in 2022.
  • A two-year temporary Capital Gains Tax relief for landlords who sell to their existing tenants will be introduced.
  • Increasing the personal allowance for pensioners by introducing a new age-related personal allowance.
  • Maintaining existing R&D tax reliefs

Small business

  • Conservatives say they will continue to ease the burden of business rates for high street, leisure and hospitality businesses by increasing the multiplier on distribution warehouses that support online shopping over time.
  • The VAT threshold will be kept under review and options to smooth the cliff edge at £90,000 will be explored.
  • They will improve access to finance for SMEs including through expanding Open Finance and by exploring the creation of Regional Mutual Banks.
  • More companies will be taken out of the scope of ‘burdensome’ reporting requirements, and they will lift the employee threshold allowing more companies to be considered medium-sized. Conservatives say this is expected to save small businesses at least one million hours of administration per year.
  • Key tax incentives that encourage small businesses to grow will be retained, including the Enterprise Investment Scheme, Seed Enterprise Investment Scheme, Venture Capital Trusts, Business Asset Disposal Relief, Agricultural Property Relief and Business Relief.
  • A commitment to promote digital invoicing and improve enforcement of the Prompt Payment Code to support small businesses with the challenge of cashflow, building on the creation of the Small Business Commissioner with powers to tackle unfavourable payment practices.
  • They will ensure that Basel III capital requirements do not inhibit lending to SMEs.
  • They commit to continue initiatives such as the Invest in Women Task Force and the Lilac Review to encourage more female and disabled entrepreneurs.
  • A Conservative Government would work with the British Business Bank and private sector fund managers to secure a £250 million Invest In Women Fund to support female entrepreneurs.
    Engage with public sector organisations including local authorities and NHS trusts and companies benefitting from government contracts to ensure that procurement opportunities are focused on SMEs in their local economies where possible and practical.

Skills

  • From this September, new teachers in priority areas and key STEM and technical subjects will receive bonuses of up to £30,000 tax-free over five years, and payments to eligible teachers in further education colleges will be extended.
  • Introducing the Advanced British Standard, building on the current A Levels and T Levels.
  • 100,000 more apprenticeships in England will be created every year by the end of next Parliament, funded by changing the law to close university courses in England with the worst outcomes for their students.
  • A commitment to support the National Citizen Service to help young people build confidence and develop the skills they need to thrive
  • A Conservative Government would deliver the Lifelong Learning Entitlement, and from the 2025 academic year, adults will be able to apply for loans to cover new qualifications.
  • Adult skills programmes, such as Skills Bootcamps, will continue to be expanded.

Economic crime

Conservatives would intensify the fight to stop money laundering and dirty money and ensure all British Overseas Territories and Crown Dependencies adopt open registers of beneficial ownership.

 

Read the full Conservative Party manifesto

Liberal Democrats

Taxation

  • The Liberal Democrats say they will implement a tax policy that ‘recognises how high the Conservatives have raised personal taxes, making the cost-of-living crisis worse, by instead focusing tax changes on reversing the Conservatives’ tax cuts for big banks and imposing a proper, one-off windfall tax on the super-profits of oil and gas producers and traders’.
  • They will work with partners in international forums, including the OECD and the UN, to tackle international corporate tax avoidance and make the case for increasing the global minimum rate of corporation tax to 21%
  • Tax cuts, when the public finances allow, will be focused on cutting income tax by raising the tax-free personal allowance, benefitting the vast majority of families and taking more low-paid workers out of paying income tax altogether.
  • The tax system will be made fairer and money will be raised for their investment plans by:
    • Reversing Conservative tax cuts for large banks, restoring the Bank Surcharge and Bank Levy revenues to 2016 levels in real terms.
    • Increasing the Digital Services Tax on social media firms and other tech giants from 2% to 6%.
    • Fairly reforming capital gains tax to close loopholes exploited by the super wealthy.
    • Introducing a 4% tax on the share buyback schemes of FTSE-100 listed companies, to incentivise productive investment, job creation and economic growth.
  • Liberal Democrats will end retrospective tax changes such as the loan charge, and review the Government’s off-payroll working IR35 reforms to ‘ensure self-employed people are treated fairly’.
  • The British Business Bank will be expanded to enable it to perform a more central role in the economy, to ensure that viable small and medium-sized businesses have access to capital, and enable it to help ‘crowd-in’ private investment, in particular in zero-carbon products and technologies.
  • They will review the tax and National Insurance status of employees, dependent contractors and freelancers to ensure fair and comparable treatment.

Small business

  • Liberal Democrats will ‘boost small businesses’ and empower them to create new local jobs, including by abolishing business rates and replacing them with a Commercial Landowner Levy to help high streets.
  • They will work with the major banks to fund the creation of a local banking sector dedicated to meeting the needs of local small and medium-sized businesses.
  • They will power scale-up companies, especially outside of London and the South East, by using innovative ways of ‘crowding-in’ private sector investment.
  • It will be made a clear objective of trade ministers to boost trade by small British businesses, and all information small and medium-sized enterprises need in terms of trade will be made readily available from a single point of contact, with tailored support for those who need it.
  • Addressing the ‘late payments crisis’ by requiring all government agencies and contractors and companies with more than 250 employees to sign up to the prompt payment code, and making it enforceable.

Skills

  • Consumers will be empowered to ensure that everyone can ‘enjoy the benefits of new technology’, by setting a UK-wide target for digital literacy.
  • Liberal Democrats will introduce a national financial inclusion strategy and require both the Financial Conduct Authority and the Prudential Regulation Authority to have regard to financial inclusion
  • They will ‘fix the skills and recruitment crisis’ by investing in education and training, including increasing the availability of apprenticeships and career advice for young people
  • New measures will be introduced to tackle the productivity crisis by encouraging businesses to invest in training, take up digital technologies and become more energy efficient, including through a new industrial strategy and reform of business rates
  • Liberal Democrats say they will invest in people’s skills by:
  • Replacing the apprenticeship levy with a broader and more flexible skills and training levy.
    • Boosting the take-up of apprenticeships, including by guaranteeing they are paid at least the National Minimum Wage by scrapping the lower apprentice rate.
    • Creating new Lifelong Skills Grants for adults to spend on education and training throughout their lives.
    • Developing National Colleges as national centres of expertise for key sectors, such as renewable energy, to deliver the high-level vocational skills that businesses need.
    • Identifying and seeking to solve skills gaps, such as the lack of advanced technicians, by expanding higher vocational training like foundation degrees, Higher National Diplomas, Higher National Certificates and Higher Apprenticeships.
    • Improving the quality of vocational education, including skills for entrepreneurship and self-employment, and strengthening careers advice and links with employers in schools and colleges.
  •  Create new Lifelong Skills Grants, giving all adults £5,000 to spend on education and training throughout their lives, and aim to increase them to £10,000 in the future when the public finances allow

Economic crime

  • Liberal Democrats will close the loopholes in economic crime legislation which allow ‘dirty cash’ to be funnelled into the UK.
  • They will also effectively use the UK’s sanctions regime to tackle economic crime.

HMRC services

  • Liberal Democrats say they will ‘put an end to Conservative waste and give taxpayers real value for money’, by giving HMRC the resources it needs to properly tackle tax avoidance and evasion.

Read the full Liberal Democrats manifesto

Green Party

  • Will push for a carbon tax to incentivise businesses to decarbonise their supply chains and to help raise the money needed to shift to a zero-carbon economy. 
  • A new wealth tax would be introduced, which would tax the wealth of individual taxpayers with assets above £10 million at 1% and assets above £1bn at 2% annually.
  • Capital Gains Tax would be reformed by aligning the rates paid by taxpayers on income and taxable gains.
  • There would be wider reform of tax rates on investment income, by aligning them with the tax and NIC rates on employment income.
  • The Upper Earnings Limit that restricts the amount of National Insurance paid by high earners would be removed.
  • Rates of pension tax relief would be aligned with the basic rate of income tax.
  • Inheritance tax would be reformed to ensure ‘that intergenerational transfers of wealth are taxed more fairly’.
  • Greens would support the setting up of regional mutual banks to drive investment in decarbonisation and local economic sustainability by supporting investment in SMEs and community-owned enterprises and cooperatives.
  • Local authorities would be given £2bn per year to provide grants to help businesses decarbonise.
  • The Prompt Payment Code would be brought into law and late payers would be barred from public-procurement contracts.
  • Would mandate the Small Business Commissioner to investigate potential instances of poor payment proactively, instead of only when a complaint has been made.
  • Investment into research and development would be increased by over £30bn in the lifetime of the five-year parliament. Additional spending will be primarily focused on tackling the climate and environmental crisis.
  • Council Tax bands would be re-evaluated to reflect large changes in value since the 1990s.  A survey of all landholdings would also pave the way for ‘fair taxation of land’.
  • Business Rate Relief on Enterprise Zones, Freeports, petrol stations and most empty properties would be removed
  • An increase in the rate of the windfall tax on oil and gas production and the closing of existing loopholes and tax-relief mechanisms. A windfall tax on banks when excessive profits are being made would also be introduced.
  • Would make several changes to VAT, reducing it on areas such as hospitality and the arts and increasing it on financial services and private education. 
  • Would ‘clamp down on tax dodging’ and strengthen global tax agreements to stop corporate tax avoidance and evasion, and to ensure a level playing field between UK and transnational businesses. 
  • HMRC would be given the resources it needs to reduce the gap between taxes due and taxes paid.  

Read the full Green Party manifesto

Plaid Cymru

  • Energy companies should be subject to an increased windfall tax, and loopholes closed which are currently exploited to avoid this. At the same time, renewable energy investment would be promoted as an alternative.
  • Would equalise capital gains tax with income tax.
  • Would investigate increasing higher earners’ National Insurance contributions, and support introducing a wealth tax.
  • Would ‘crack down on tax evasion and avoidance’, and abolish loopholes for non-doms.
  • Business rates would be reformed, in order to establish a system which better supports small businesses.
  • Reductions in support to small businesses would be reversed, and the multiplier to support high street business, such as retail and hospitality amended.
  • Seek to map out skills needs by sector, identifying what is needed to fulfil those needs and create an environment where learners are incentivised to remain on apprentice courses by addressing student poverty.
  • This would be done by implementing an apprenticeship living wage and supporting colleges to deliver projects that reduce the financial burden on students such as free travel and free meals.
  • Create a Lifetime Learning Allowance, this would consist of a mixture of grants, loans, and a right to free provision.
  • Grants of £5,000 would be offered to the Personal Learning Accounts of every individual over 25 to train or retrain, with added loans to cover more expensive courses and maintenance costs for those who want to take courses full time (repaid in the same way as student loans).

Read the full Plaid Cymru manifesto

Reform UK

  • Says that HMRC failed to collect tens of billions in taxes last year due to understaffing and bad management, and that ‘improved HMRC competence would deliver lower taxes to British workers’.
  • Would lift the Income Tax Start Point to £20,000 per year.
  • Stamp Duty would be cut to 0% for property prices below £750k; it would be cut to 2% from £750k; and 4% for properties over £1.5m.
  • Would scrap VAT on energy bills, and scrap environmental levies.
  • The VAT Tourist Tax would be abolished.
  • Inheritance Tax would be abolished for all Estates under £2m The rate above £2m will be 20%, with the option to donate to charity instead.
  • The minimum profit threshold would be lifted to £100k, and the main rate of Corporation Tax reduced from 25% to 20%, then to 15% from Year 3.
  • Would abolish IR35 Rules.
  • The VAT Threshold would be lifted to £150,000.
  • Business Rates for high street based SMEs would be abolished, and offset with an Online Delivery Tax at 4% for large, multinational enterprises to create a fairer playing field for high streets.
  • Entrepreneurs tax would be cut to 5%.

Read the full Reform UK ‘contract’

Scottish National Party

  • MPs elected for the SNP will demand the full devolution of tax powers to the Scottish Government
  • With the full devolution of tax powers, the SNP would ‘crack down on tax avoidance and evasion and improve the transparency of tax paid by international companies to ensure that they make a proportionate contribution to tax revenues’.
  • Supports reform of VAT to address the current imbalances and to ensure that life saving products, like defibrillators, are as accessible and affordable as possible.
  • Proposes introducing a lower rate of VAT for hospitality and tourism sectors, and addressing the imbalance in VAT rates in the construction sector to encourage the refurbishment and retrofitting of existing buildings and remove VAT from on-street electric vehicle charging

Read the full SNP manifesto

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Olivia Wood, business content writer

Olivia Wood is a writer with hands-on experience in business success. Having made the leap into the world of freelancing, she offers her expertise to help others.

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