The Conservative and Labour manifestos: taxation and corporate proposals


Author: Neal Todd, Alex Taylor, Eleanor Green


The General Election takes place this Thursday.

With small and medium sized businesses making up the backbone of the UK economy there has been significant interest in the parties’ approach to the treatment of tax and private corporations.

The latest polls show the Conservatives and Labour as the two dominant parties so we have considered their respective manifestos and summarised the proposals on these areas in the link below.  We have also included a short note in both parties’ position on Brexit, given the dominance of the issue in current UK politics.

 

Other pledges to note

Conservative 

  • The imposition of a 3% Stamp Duty Land Tax surcharge on non-UK resident buyers of residential property (this is in addition to the 3% surcharge which is already in existence for buyers of second homes).
  • An increase to the £3,000 Employment Allowance for small businesses.
  • The continuance of the Seed Enterprise Investment Scheme and the Enterprise Investment Scheme.
  • Support to start-ups and small businesses via government procurement, and a commitment to on time payment.
  • The expansion of start-up loans from the British Business Bank.
  • Workers in the gig economy will be given certain additional rights, such as the right to request a more predictable contract.

Labour

  • Changes to the criteria that a company must meet in order to be listed on the London Stock Exchange.
  • Amend the Companies Act 2006 so that a company’s purpose encompasses what is in the best interest for all its stakeholders (not just its shareholders).
  • Introduce a public interest test to prevent hostile takeovers and asset stripping.
  • Require large companies to set up ‘Inclusive Ownership Funds’, where up to 10% of the company will be owned collectively by Dividend payments would be distributed equally among all employees, though capped at £500 with any balance being used to top up a ‘Climate Apprenticeship Fund’.
  • Elected worker-directors to make up one-third of boards with more control over executive pay.

From our review of the manifestos it appears that, whichever party forms the next government, businesses and individuals alike will be faced with changes to the tax system, significantly so under a Labour government.

It may be prudent to consider accelerating income at the current tax rates by taking dividends now, paying bonuses where possible and authorising distributions from offshore trusts. With respect to Labour’s capital gains tax proposals (particularly the possible end to Entrepreneurs’ Relief), it may be wise to consider rebasing company portfolios in order to extract any gains now at the known rate of 20% and dispose of investments that qualify for Entrepreneurs’ Relief, in order to utilise the reduced capital gains tax rate of 10%.

At this stage it is impossible to say with certainty what the parties’ respective tax policies will look like were either to form a government and any decisions should be considered in light of such uncertainty. It is generally accepted that there may only be a short window between the General Election and the next Budget (on Monday Labour’s John McDonnell announced he would deliver his first Budget on 5 February 2020). With this in mind, any tax planning may need to be undertaken during that period, when the new government is known.


Fladgate is an advanced, commercially astute international law firm serving a wide range of corporate, institutional and private clients. From our base in London, we help our clients to realise their goals, close deals, and protect and preserve their assets.

Disclaimer: The legal content provided by Fladgate LLP is for information purposes only and should not be relied on in any specific case without legal or other professional advice.

Copyright is owned by Fladgate LLP and all rights in such copyright are reserved. Material is not to be reproduced in whole or in part without prior written consent.

View by date:


View by author:


Would you like to hear more?