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Reeves rules out emergency Budget

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In the early days of the general election campaign, the political parties have made several pledges on tax, although headroom for more than minor changes would appear to be limited, as the IFS notes in a recent report on public finances and the general election (see below).

The Conservative Party’s headline announcement is the proposed reintroduction of an age-related personal allowance, describing the change as a ‘triple lock plus’ where the personal allowance would be uprated annually in line with the highest of average earnings growth, inflation or 2.5%. This would be a part-reversal of the government’s previous decisions to ringfence and then scrap the age-related personal allowance and to later freeze the personal allowance until 2028. Detail has not been published on who this would affect, and whether it would take a similar form to the previous allowance.

The Chancellor has also committed in Spring Budget 2024 to further cuts to NICs when conditions allow and has more recently hinted at removing the income tax personal allowance taper that applies for earnings over £100,000 and potentially cutting or abolishing inheritance tax (although would apparently not be drawn on whether the latter would be included as a manifesto pledge). In an interview with The Telegraph (24 May), Jeremy Hunt also pledged that ‘there will be no wealth taxes under a Conservative government’.

Labour had already announced plans to introduce VAT on private school fees, extend the oil and gas levy, tackle tax avoidance and reform the remittance basis, with much of the resulting funding already committed to extra investment in the NHS, police and schools.

In a recent speech at Rolls-Royce in Derby, Shadow Chancellor Rachel Reeves also ruled out income tax and NICs increases, and confirmed that Labour would not hold a Budget without forecasts from the Office of Budget Responsibility which would take ten weeks to commission – making a first Budget under a Labour Government more likely in the autumn (and ruling out an emergency Budget shortly after the election). Reeves also suggested that Labour would maintain the main rate of corporation tax at 25% and had already committed to publishing a five-year business tax roadmap within the first six months of taking office.

Meanwhile, Greater Manchester Police have announced that ‘no further police action will be taken’ following allegations about Angela Rayner MP. The force also confirmed that ‘matters involving council tax and personal tax do not fall into the jurisdiction of policing’ – a point that has not always been made clear in media reports. What constitutes a residence for private residence relief purposes is not always straightforward, as analysis of tribunal decisions from recent years illustrates (see Tax Journal 2021, issue 1518).

Issue: 1665
Categories: News