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Party’s Election Pledges: What Property Investors Should Know

Published by Prerana
Posted Date: July 3, 2024 , Modified Date: July 3, 2024

The general elections are on our doorstep, and the parties have unveiled their manifestos. But what are they saying about property and taxation? The Tories and the Labour Party have unveiled attractive policies, but what do we need to know about the plans of the smaller parties like the Greens, Liberal Democrats, Plaid Cymru, Scottish National Party (SNP) and Reform?

According to the Institute of Fiscal Studies (IFS), the next government could face financial challenges. But will this mean hiking taxes on homes and properties? Let us take a look at each party’s tax policies and see if there is cause for concern.

Conservative Party

The Conservative Party has pledged not to raise rates of Income Tax and Corporation Tax. Also, its main pledge is to reduce the National Insurance Contributions (NICs). And, it has made a few encouraging promises for parties who are both looking to buy and sell. Here is a detailed breakdown of the pledges the Conservatives have made:

  • Make the first-time buyer Stamp Duty Land Tax (SDLT) relief threshold of £425,000 permanent
  • Enforce a Capital Gains Tax (CGT) relief for landlords who sell to their existing tenants. The relief will be a two-year temporary relief
  • Retention of Business Asset Disposal Relief (BADR) and no plans to increase VAT threshold but keep it under review
  • Increase the Income Tax personal allowance for pensioners from April 2025 as part of the Triple Lock Plus scheme; this increases the allowance by the highest earning or 2.5% each year
  • Starting in April 2026, the government will change the High Income Child Benefit Charge (HICBC), requiring households earning over £120,000 to repay some of their child benefit and those earning £160,000 or more to repay the full amount

Labour Party

The Labour Party has pledged not to raise Income Tax, VAT, and NIC rates and rather focus on tackling tax avoidance and closing the tax gap. At the same time, it has also proposed some tax policies that will directly and indirectly affect the property sector. Some of the promises they have made include:

  • Increasing the SDLT rate by 1% for purchases of residential property in England and Northern Ireland by non-UK residents
  • Boost revenue collection by closing non-dom tax loopholes
  • Invest £855 million in the HMRC to modernise the tax authority by increasing registration and reporting requirements, investing in new technology, building capacity and more
  • Taxing carried interest as income
  • Cap the current rate of Corporation Tax at 25%
  • Retain key capital allowances, including full expensing and the annual investment allowance

Green Party

The Green Party has also pledged not to raise the Corporation Tax but has proposed some personal tax changes which may be relevant for property owners and investors. Some of these are:

  • Introducing Wealth Tax for assets above £10 million and reforming Inheritance Tax (IHT) to close loopholes used by the rich
  • Aligning the rates of CGT with Income Tax
  • Setting the rate of Income Tax relief for pension contributions at 20%
  • Impose Windfall Taxes to encourage companies to decarbonise

Liberal Democrats

The Liberal Democrats have presented a ten-point tax policy that targets big businesses, banks and industries while making scant mention of properties. Some of the main points they have proposed include:

  • Increasing the CGT exempt amount from £3,000 to £5,000
  • Invest £1 billion in HMRC to improve its services and target tax evasion
  • Take the bank surcharge and bank levy revenue to 2016 levels
  • Increase taxes on industries, such as water companies, gas industry, and aviation industry, due to environmental concerns

Plaid Cymru

Plaid Cymru, unlike other parties, plans to increase the NIC rates for high-income earners. Its main motive lies in having powers to set Income Tax bands and thresholds in Wales. Here is what the party has promised for tax changes in the UK:

  • Increase Windfall Taxes on oil and gas companies
  • Introduce a Wealth Tax
  • Target loopholes for non-dom and other tax evasion strategies
  • Align CGT rates with Income Tax rates
  • Increase the Income Tax personal allowance for pensioners

The Reform Party

The Reform Party has pledged to cut taxes by increasing the Income Tax personal allowance to £20,000, which is currently at £12,570 and the 40% threshold to £70,000, which is currently at £50,271. It has also proposed other taxes that may interest property businesses, such as:

  • Major cuts to SDLT
  • Increase the threshold for VAT registration from £90,000 to £150,000
  • Abolish IHT on assets below £2 million
  • Reduce the main rate of Corporation Tax from 25% to 20%, then to 15%

Scottish National Party (SNP)

The main agenda of the Scottish National Party (SNP) is full devolution of tax powers. This applies to taxes related to property businesses as well.

Conclusion

Political activities and election cycles naturally affect the nation’s business environment and economy. The property investment and ownership sector in the UK is no different. For the coming election, the major parties have made major promises that, if implemented, look set to bring some considerable changes to this sector. This article summarises some of those promises to help landlords and investors anticipate what may be round the corner.

Prerana
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