The new Labour Government has won a landslide victory. Its proposed tax changes will have significant implications for taxpayers across the spectrum, in due course.

We focus here on the pledges made by the Labour Party in its manifesto.

For the details behind some of the headlines, we’ll have to wait for a Budget and publication of draft legislation, likely to be September at the earliest.

So, what do we know so far?

Personal taxes

Income Tax

• No increases to the rates of Income Tax or National Insurance for the life of the next Parliament but the freezing of thresholds until 2028 has also been confirmed.

The non-UK domicile regime

• Abolition of remittance basis of taxation for ‘non-doms’.
• New residence-based regime: no UK tax on Foreign Income and Gains (FIG) for first four years of UK residence, provided taxpayer has been non-tax resident for the last 10 years.
• Inheritance Tax (IHT): move to a residence-based regime from April 2025.
• Non-UK situs assets will be subject to IHT if the owner has been UK tax resident for 10 years or more. This will remain the case for 10 years after ceasing to be UK tax resident (the 10-year tail).
• Offshore trusts: new trusts and additions to existing trusts made by a non-UK domiciled settlor on, or after, 6 April 2025 will be subject to new residence-based rules. The protection from tax on non-UK source income and all capital gains arising within settlor-interested trust structures will no longer be available for non-UK domiciled individuals unless they qualify for the new four-year FIG regime.
• Trusts: all assets held within a trust to be subject to IHT (subject to settlor being UK resident for 10 years).
• Investment incentive during the four-year arrival window so that UK investment income is free of UK tax.
• Further details:
• • ‘Non-doms no more‘ – Taxation magazine
  • Offshore trustees and non-doms tax strategies
  • Non-doms UK tax strategies
  • Labour’s 2024 Manifesto: Key changes to non-dom taxation and offshore trusts

Private equity

• Increase rate of Capital Gains Tax (CGT) on carried interest to equal income tax rates or tax as income.

Inheritance Tax

• No announcements, except for the non-UK domicile regime as above.

Capital Gains Tax

• No announcements but no pledge not to increase rates.

Corporation Tax

• Cap the main rate at 25%.

VAT

• No increase to the rate of VAT.
• Add VAT to school fees. You can read more here.

Manifesto

For full details, as published by the Labour Party, please see here.

Contact Katharine Arthur, Partner and Head of Private Client, if you wish to discuss how these proposed tax policies will affect you.