Looking for something?

Contact us

News & Updates

Impact of The Labour Party’s election win on businesses

Following The Labour Party’s win on majority in the 2024 General Election, for business owners, this could mean a series of potential changes. Let’s have a look at what the Labour Party has outlined so far and some changes that we can expect from an accounting and business owner perspective.

What will happen next?

The new Parliament will meet on 9 July 2024 to elect the Speaker and swear in members. The State Opening of Parliament and The King’s Speech will follow on 17 July 2024, likely introducing new laws for the OBR to forecast major tax changes, setting Labour apart from the previous government.

Rachel Reeves has stated she won’t hold any fiscal events without an OBR forecast. With a 10-week notice required, the earliest budget could be in mid-September 2024. Labour plans to have one major fiscal event each year, probably in the Autumn, giving enough time for it to become law before the new tax year starts on 5 April.

What we know so far

The Labour Party released “Labour’s 20 Pledges to Business,” aiming to foster economic growth, social justice, and environmental sustainability. Keir Starmer, Labour’s leader, emphasises the importance of a strategic partnership between the government and businesses to drive long-term investment and innovation. This document states the following:

VAT and Tax

  • Enhanced HMRC Resources: Labour plans to increase resources for HMRC to better investigate and prevent VAT avoidance, meaning stricter scrutiny and enforcement related to VAT compliance.
  • Fair Tax Programme: A commitment to ending tax avoidance by corporations and wealthy individuals, potentially affecting business tax strategies.
  • Small Profits Corporation Tax Rate: Setting the small profits corporation tax rate at 21% (up from 19%), which may increase the tax burden for smaller businesses.
  • Scrapping Quarterly Reporting: Eliminating the requirement for businesses with a turnover under £85,000 to report taxes quarterly, reducing the administrative burden related to Making Tax Digital (MTD).

Financial Support and Business Development

  • National Investment Bank and Regional Development Banks: Creation of a £250 billion National Investment Bank to provide funding for SMEs, future industries, and infrastructure projects, offering new opportunities for financing and investment.
  • Post Bank for Relationship Banking: Establishing a new Post Bank offering relationship banking through up to 3,600 branches, providing SMEs with easier access to banking services and financial support.
  • Business Development Agency (BDA): Creating a central agency for business support with a network of advisors and an online portal, streamlining access to business advice and resources.

Late Payments

  • Ending Late Payments: Ensuring businesses bidding for government contracts pay their suppliers within 30 days.
  • Arbitration and Fines for Late Payments: Introducing a system for binding arbitration and fines for persistent late-payers, impacting businesses’ cash flow and recovery of overdue payments.

Reporting and Compliance

  • Business Rates Reform: Implementing annual revaluations of business rates to prevent sudden rate hikes, excluding new investments in plant and machinery from future business rates valuations, and reforming the system to better support traditional retail and high street businesses.

The Labour Party’s manifesto

According to The Labour Party’s manifesto, titled “Change” they aim to provide stability and certainty in the business tax regime, countering the frequent changes under the Conservatives. They pledge one major fiscal event annually, giving ample notice of tax policies. Corporation tax will be capped at 25% for the entire parliament, with permanent full expensing for capital investment and annual investment allowance for small businesses. Labour will publish a clear roadmap for business taxation to support long-term planning. They also plan to reform England’s business rates system to be fairer, incentivise investment, support high streets, and tackle empty properties.

Your next step

The Labour Party’s proposed policies aim to provide stability and certainty, but adapting to new tax regulations and financial strategies is crucial for your business’s success. Our team of expert accountants is here to help you understand and prepare for these upcoming changes. Contact BK Plus today for personalised advice and solutions.

Share this page

Want to speak with one of the team?

Complete the form and one of our team will be in touch. Alternatively, drop us an email at hello@bkplus.co.uk or contact one of our local offices.

    This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply. By clicking submit you agree to our Website Terms & Conditions and Privacy Policy.