We are on the eve of one of the most momentous elections in the UK’s history. Much will be decided as a result of it- not least the fate of Brexit. For owner-managers and high net worth individuals, however, the far more pressing concern is the possibility of a Labour government.
It is clear that this would make a massive difference to their personal and business plans. Should Labour form a government, it will radically redistribute wealth through higher taxes and provide a more significant role for the state, possibly driving some entrepreneurs away from the UK.
The impacts could be immediate if a Labour government decided to hold an immediate post-election budget, possibly even making measures retroactive to the day it assumed power.
And while a Conservative government is the most likely outcome (with an apparently steady lead on the polls over Labour of around 10 points), it may also hold a snap budget with impacts on business.
The possibility of shock measures for owner-managers is low. While the Conservatives have held off on or even reversed many of their previously trailed business and wealth friendly policies, theirs is still the lowest tax manifesto.
Corporation tax and personal tax thresholds while frozen, remain more generous than those promised under a Labour government.
It is clear though that the Tory talk of making post-Brexit Britain a low-tax, low-regulation ‘Singapore on Thames’ is now just that – talk.
To act or not
So should owner-managers anticipate potential trouble by taking action now?
If you or your business are close to wrapping up any imminent and time-critical property or share transactions, the answer is maybe. This is especially relevant for any cross border transactions.
If you are non-resident, being a non-voter, you are an easy target whoever gets into power. Surcharges on property purchases by non-resident owners – of 20% in the case of Labour and 3% (up from the current 1%) in the case of the Conservatives – are both manifesto pledges that could be imposed overnight.
Labour is also proposing significant changes to the tax status of non-residents, including:
- Scrapping non-domicile status
- Ownership registers of companies in Crown Dependencies
- Possible tax haven withholding taxes
The message for anyone who has an international element to their affairs is that they can expect the landscape to change quite radically under Labour.
Imminent business disposals or share sales are another matter of concern. Both parties have vowed to re-examine Entrepreneurs’ Relief. Could there be a shock post-election budget measure here? Unlikely but possible.
Price Bailey is, of course, happy to help answer any questions and advise on the best course of action pre-election on these or related matters.
Wait and see
Otherwise, is it time to take action? The short answer is no.
It is better to monitor the result closely and wait and see who comes into power. Knee-jerk responses ahead of the election may end up being costly.
While the UK remains an attractive place to grow a business and to invest, it is clear that neither party is offering a manifesto for entrepreneurial growth and stimulation. Change is afoot, and we will keep you up to date on the changes that matter.
When the political landscape is clearer on the 13th December, we can help you make the best plan for your business and personal wealth.
This post was written by Chris Williamson,Tax Partner at Price Bailey. If you would like to know more then please contact Chris using the form belo.
We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.
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