We are now getting used to the new Government and while the first few weeks of Keir Starmer’s premiership have not been too dramatic, there has been swift action on some of their key policy objectives already, with some significant measures outlined in the King’s Speech.
What is conspicuous in its absence is any comment on tax policy. While the Labour manifesto was very clear about which taxes they were not going to change, it was almost totally silent on which taxes they are going to change and we assume that they will have to change some.
The papers are this morning reporting that Rachael Reeves will next week provide a ‘state of the nation’ address on the UKs finances and that she will announce (perhaps unsurprisingly) that “it’s worse than we expected”.
All of this does lend itself to the theory that the Government are preparing us for some tax rises in the Autumn. What form these will take is unclear, but given that Labour have committed not to increase Income Tax, National Insurance or VAT, it means that they will have to target some of the more niche taxes. Capital Gains Tax and Inheritance Tax could well be top contenders.
On Capital Gains Tax, various Labour MPs and Thinktanks have long argued that the rates should be aligned with income tax so this is a move that seems entirely plausible come the Autumn.
On Inheritance Tax, the party position is less clear, although it is probably reasonable to say that the position is unlikely to get any better under a Labour government, but it could well get much worse.
As such, our guidance to clients is this…
If you are thinking about implementing any estate planning, the time is now. Generally, changes to gifting and Trust legislation do not apply retrospectively (although there is never any total guarantee) and so it makes sense to implement plans now under the current regime while we still have the chance.
Given the time taken to draft and implement some solutions, we probably now only have a matter of weeks to act before it will be too late.
We will be holding a special webinar session titled “What might the Labour Government mean for Inheritance Tax & Estate Planning?” on Thursday 8th August at 2pm – we hope you can join us there. You can sign up using the link below:
https://us02web.zoom.us/webinar/register/WN_u7vuDcfcQim_Yeqf_6B7GQ
If you would like assistance with your own estate planning, please don’t hesitate to contact a member of our friendly team on 0203 478 2160.
