Labour’s Manifesto Sparks Concern Over Key Taxes: What Small Firms and Experts Are Saying

Labour’s manifesto has put economic growth at the forefront of its agenda, aiming to cap corporation tax at 25% and support small businesses through various initiatives. While these pledges have been welcomed by some, concerns have been raised over the absence of promises regarding key taxes such as capital gains tax (CGT).

The lack of a commitment from Labour not to increase CGT has sparked worries among entrepreneurs and investors. With shadow chancellor Rachel Reeves and Sir Keir Starmer stating they have ‘no plans’ to raise CGT rates but not ruling it out entirely, uncertainty looms over the potential for a tax hike if Labour wins the election.

Experts like Rachael Griffin from Quilter and Jason Hollands from Evelyn Partners have highlighted the implications of Labour’s tax pledges. While the party has explicitly ruled out increases to income tax, national insurance, VAT, and corporation tax, the omission of CGT from their manifesto has raised eyebrows and fueled speculation about potential tax hikes in the future.

Jason Hollands pointed out that by explicitly ruling out certain tax increases, Labour inadvertently creates suspicion about other areas that could be targeted for revenue generation. Capital gains tax, inheritance tax, and pension saving treatments have all been subjects of speculation, leaving investors and entrepreneurs on edge about potential tax changes under a Labour government.

The focus on tax policies in Labour’s manifesto has also drawn attention to the need for reform in the business rates system. The party has pledged to ‘replace’ the current system to level the playing field between high street businesses and online retailers. This move has been praised by industry leaders like Kate Nicholls from UKHospitality and Simon Dodds from Young’s, who see it as a step towards supporting businesses and driving economic growth.

However, concerns remain among small business owners, with Tina McKenzie from the Federation of Small Businesses calling for more reassurances from Labour on the tax burden faced by entrepreneurs. As the election approaches, clarity on tax policies and support for small firms will be crucial in winning over the business community.

On the industrial front, the Confederation of British Industry (CBI) has welcomed Labour’s industrial strategy and proposals to streamline planning processes. Chief executive Rain Newton-Smith emphasized the importance of certainty in unlocking investment, particularly praising Labour’s commitments to not increase corporation tax and consider reforming the business rates system.

As the election draws near, the economic implications of Labour’s manifesto pledges on taxes and business support will be closely watched. The party’s stance on key tax issues like CGT and business rates reform will play a significant role in shaping the economic landscape for entrepreneurs and investors in the UK.