The general election campaign is heating up and within a few weeks we’ll find out which party holds the keys to Number 10.

And while we can speculate about the outcome of the 4 July poll, nothing is certain until the results come in.

But despite this uncertainty, it’s important for you to get up to speed with what the two main parties are proposing and how this might affect you.

Here, we give our round-up of the Conservatives’ and Labour’s tax policies that we’ve heard about so far and share our advice to help you prepare for a changing tax landscape.

But bear in mind that, as with anything in politics, the information below is subject to change, especially as we await the release of the election manifestos.

Income tax and National Insurance

Both the Conservatives and Labour have pledged not to increase income tax or National Insurance. But because they’ve also said they’ll keep income tax thresholds frozen until 2028 if either of them wins the election, this effectively means a tax rise because of pay inflation.

Non-dom tax

At the 2024 Spring Budget, the Government announced the current rules for non-UK domiciled individuals would end from April 2025. Under the new system, people who have been tax resident in the UK for more than four years would pay UK tax on their foreign income and gains, regardless of where they are domiciled. However, this legislation wasn’t enacted before the announcement of the general election, which throws doubt on whether the reforms will go ahead.

Labour, meanwhile, have vowed to close the “loopholes” in Rishi Sunak’s non-dom plan, which could include:

  • Removing the transitional rule allowing those who claimed the remittance basis previously to pay UK tax on only 50% of their foreign income in the 2025/26 tax year.
  • Preventing non-doms from sheltering offshore assets from inheritance tax (IHT) by transferring them to an excluded property trust before the start of the new regime.

Inheritance tax

So far, we haven’t heard much on inheritance tax, although Chancellor Jeremy Hunt has described the tax as “profoundly anti-Conservative”.

The Labour Party leader Sir Keir Starmer has previously stated he was “fundamentally opposed” to the idea of scrapping or reducing IHT.

Business taxes

If Labour gains power, the party said it would publish a roadmap for business taxation. And for the period of the next parliament, the party plans to cap the headline rate of corporation tax at its current rate of 25%.

Equally, the Tories plan to support businesses by keeping taxes low.


The Conservatives have promised to raise the tax-free pension allowance via a ‘Triple Lock Plus’. Under the plans, the personal allowance for pensioners would increase by either 2.5%, in line with average earnings or inflation – whichever is higher.

Labour, meanwhile, said it wouldn’t match the pledge but has stressed it remains committed to the state pension triple lock.

Capital gains tax

Labour has ruled out increasing capital gains tax (CGT) if they win the election. The Conservatives also aren’t expected to propose any changes to this tax.


The two main parties have both ruled out raising VAT.

However, Labour has vowed to end the tax breaks for private schools that exempt them from VAT and business rates.

Whichever party secures power, it’s likely the detail of any tax plans won’t be fully revealed until there is an Autumn Statement.

Meanwhile, the Institute for Fiscal Studies (IFS) has said the next government effectively has three options:

  • Carry out the spending cuts baked into existing plans – cuts that will inevitably be painful.
  • Implement tax rises – over and above those already in the books.
  • Or, borrow more – something that’s highly unlikely to be consistent with a promise to stabilise debt as a share of national income.

The IFS added there was “no escaping the tough fiscal realities facing the UK”.

Our thoughts on the Tories’ and Labour’s tax policies

It’s always interesting to read tax policies. There’s a tendency to treat taxpayers as if they don’t have any common sense. But we all know from our own experience that if you increase your spending you’ll need to either grow your income or take out more debt. It’s therefore frustrating to hear political parties say they won’t increase the rate of tax. Taxpayers need to know what other changes might be put in place to raise the overall tax take to make an informed decision as to whether the maths works.

Here’s our reaction to the two main parties’ policies:

  • Income tax and National Insurance: the Conservatives and Labour aren’t brave enough to directly increase the tax burden but they’re happy enough to rely on fiscal drag to bring more tax through the door.
  • Non-dom tax: whether the changes will come into force from 6 April 2025 – and exactly how they will look – remains to be seen. Non-dom tax is a hugely complex area of tax, so I’d imagine these reforms will take many years to fully take effect. In the meantime, the uncertainty may well have caused many internationally mobile individuals to leave the UK. That’s the price we pay for not thinking policies through before announcing them.
  • Inheritance tax: we don’t expect either party to abolish IHT. And even if they did, it would be a cosmetic change because they’d replace it with something else such as capital gains tax on death or a wealth tax. It’s highly unlikely any party will completely abolish a tax that brings in around £7 billion per year. It’s much more likely the Tories or Labour will look at the current reliefs that are available as a means of raising more tax.
  • Business taxes: it’s good news that neither of the two main parties are suggesting additional corporation tax rises. But the devil is always in the detail. It’s possible some of the current reliefs available for companies will be revisited with a view to increasing the corporation tax take.
  • Pensions: currently pensions are IHT-efficient vehicles. The current government has started the process of making significant changes to the system. It’s likely this will continue either way, but whether the inheritance tax-favourable status of pensions will disappear going forward, we’ll have to watch this space.
  • Capital gains tax: it’s good that both Labour and the Conservatives are committing to no CGT rises. However, this is very similar to the inheritance tax situation. There are significant reliefs available within the system and these could easily be targeted in a bid to raise the tax take without increasing the headline rate.

Our advice for taxpayers

It is a time of uncertainty. But I am a great believer in not allowing the tax tail to wag the commercial dog. So, I’d caution my clients against creating disposals simply for the purpose of utilising a relief.

However, if it’s likely an event will take place, such as the sale of a property or a business, then it would make sense to try to complete before the election or as soon as possible afterwards.

We’re unlikely to see major changes until we have a new Budget, probably in the autumn. So, if it’s possible for you to complete a transaction in that time without compromising the commerciality of that deal, it would be sensible to do so.

General election tax advice

Contact our team of specialist tax advisers to discuss how the general election might impact you. Call us today on 07813 434195 or email

Steph Churchill

Stephanie Churchill

Managing director & co-owner of Churchill Taxation