Saffrey has said there is bound to be “continued speculation” as to what a fully up and running Labour government will mean for the rural sector.
The accountancy firm said Labour plans, if the party holds good to their word, appear “fairly cut and dried”.
Saffrey director, Lucy de Greeff, and a member of the firm’s land and rural practice group have issued a recap of what is known from the Labour manifesto as well as other sources on possible tax implications for the farming and rural sector.
De Greeff said: “Labour’s plans if they hold good to their word appear fairly cut and dried although there is bound to be continued speculation as to what might happen once the new government is fully up and running.
“Of course, there are other policies too that will affect the rural sector, not least a dramatic delivery programme for new housing, new towns, urban extension and changes to planning to access more ‘low value green belt’ – and what this means in terms of releasing land for development, compulsory purchase in some instances, loss of farmland and biodiversity.”
Tax
Income tax
Labour has pledged not to raise income tax. However, income tax thresholds are expected to remain frozen until April 2028, which will continue the impact of fiscal drag.
Capital Gains Tax (CGT)
Labour made no promises on CGT in its manifesto although, during the election campaign, Keir Starmer did guarantee that under a Labour government people selling their main home would not pay CGT.
His refusal to rule out raising CGT has led to speculation that CGT could be increased, although he has said that “all of our plans are fully funded and fully costed and none of them require tax rises over and above the ones that we’ve already announced.”
Inheritance Tax (IHT)
Saffrey said it has been widely speculated that there could be significant reform to IHT.
Possible changes include making agricultural property relief and business property relief less generous. The starting point for any changes could be a consultation after the summer recess.
Business tax
Within six months, Saffrey is expecting the government to publish a roadmap for business tax, setting out key policy details for the expected five years until the next election with the proposed aim of helping businesses to plan investments with confidence.
It also expects clearer guidance to help businesses understand what expenditure qualifies for full expensing and the annual investment allowance.
Tax avoidance
Most of the proposed increase in tax revenue is set to come from reducing tax avoidance.
One major fiscal event per year
Labour has committed to “one major fiscal event a year, giving families and businesses due warning of tax and spending policies”.
Based on this, and an earlier statement that said there would be “one budget every autumn, at least four months before the new tax year,” Saffrey said major tax announcements are expected to only be made annually each autumn.
