Comment: Labour’s Manifesto Policies

Adrian Kennett, Director, Dalriada Trustees, said: “My worry on Labour and Conservative manifestos is more about what they are not saying.  The triple lock is a vote winner – included for both.  Labour is supportive of the direction of travel from the Conservative Mansion House speech – seeking to drive UK pension funds to invest in UK assets – something not mentioned in the Conservative Manifesto.   Labour will “adopt reforms to workplace pensions to deliver better outcomes for UK savers”.  The best way of delivering a better outcome would actually be for more workers to contribute more.  There is silence on the reforms to Auto-Enrolment.  Silence on the PPF as a consolidator.  Silence from Labour on the taxation of pensions (e.g. Life Time Allowance).  At some point, the books have to be balanced and people have to pay.  There are inescapable problems that aren’t being talked about – largely the fact that 8% of earnings through auto-enrolment doesn’t buy you a comfortable retirement.”

Dee Aylward, Partner in the Residential Property team at Mishcon de Reya, commented:

On the SDLT non-UK resident surcharge

“Labour has proposed increasing Stamp Duty Land Tax on the purchase of residential property by non-UK residents by 1%. The existing non-UK resident surcharge has not significantly deterred high-value property investment from abroad to date, and we do not consider this increase is likely to.”

Jessica Good, Managing Associate in the Immigration team at Mishcon de Reya, commented:

On asylum

“Labour pledges to restore order to the asylum system so it operates ‘swiftly, firmly, and fairly’ through the recruitment of additional caseworkers to clear the backlog, and the recruitment of an additional 1,000 staff to fast-track removals to safe countries and negotiate additional returns arrangements to speed up returns. Labour is also committing to working with partners to address humanitarian crises which lead people to flee their homes and offer support for refugees in their home region. For many, such crises mean that individuals fear for their safety in their home country, and the offer of additional support to remain in their home region is difficult to imagine. It is unclear whether this plan would consider the relocation of individuals to neighbouring countries.”

Carol Katz, Partner in the Tax and Wealth Planning group at Mishcon de Reya, commented:

On non-doms

“Labour’s manifesto confirms their proposals to abolish non-dom status, saying that the funds raised from abolishing the existing regime will go towards reducing NHS waiting times. Unlike the Conservatives’ proposals announced by the Chancellor on 6 March, Labour have said that they will prevent existing inheritance tax (IHT) planning by non-doms using excluded property trusts and make offshore trusts created by non-doms subject to IHT. There is no detail on whether there will be a grandfathering period for existing trusts. As we have previously said, the Conservatives’ deliberate plan to retain the IHT shelter provided by excluded property trusts for such trusts created before April 2025, enables those non-doms who have been in the UK for a while (but under 15 years) to protect their non-UK assets from IHT. Without this period of planning or grandfathering it is likely that many non-doms will leave the UK, taking their spending, investment, businesses, and employment with them. This uncertainty will worry non-doms who will be unclear on the taxation of the structures that may have been in place for many years.” 

On IHT

“It was thought that the Labour manifesto might include some changes to how inheritance tax (IHT) operates. The Shadow Chancellor had said in her paper ‘The Everyday Economy’, published in 2018, that IHT needs to be changed ‘wholesale’ or ‘reset’. The manifesto gave no indication that the tax will be reviewed in the future but, should Labour win the election on 4 July, it could be a topic that comes up at some point during the next Parliament, if not at the first fiscal event of the new Government.”

On CGT

“Despite media speculation, there was no pledge to align capital gains tax rates with income tax rates in the Labour manifesto; this will provide some certainty to investors.”

On Carried Interests

“The Labour manifesto includes the pledge to ‘close the loophole’ that enables carried interest to be taxed as income; it is currently subject to capital gains tax treatment. This position may have a significant impact on the private equity industry in the UK, especially given that many non-doms work in the industry and may feel like Labour’s pledge to abolish the non-dom regime combined with their pledge to change the tax treatment of carried interest is a step too far.”

Rob Lewis, Partner and Head of Mishcon de Reya’s Education group, commented:

Tax on private school fees

“After being anticipated for so long, it is now absolutely clear that Labour will introduce VAT on independent school fees and end business rate relief. What is not yet clear is when and how the changes will be introduced, which makes it very difficult for families and schools to plan. It is inevitable that some independent schools will not survive.”

Fran Rance, Managing Associate at Mishcon de Reya, commented:

On legal immigration

“Labour has committed to reducing net migration. Although they have not committed to a target, which seems sensible, one of the ways they plan to achieve this is by reducing the dependence of some parts of the economy on overseas workers to fill skills shortages.

“The manifesto pledges to bring in training plans for certain sectors. How will the actual detail of this policy look in practice? Will UK businesses be required to implement new training plans before being able to sponsor migrant workers from overseas? We know that many businesses in the UK continue to face skills shortages in the aftermath of Brexit and COVID-19, and it remains to be seen what the short- and long-term impact of any such reforms would be. It also remains to be seen if there are people in the UK who are ready and willing to do the jobs in question.”

Rob Morgan, Chief Investment Analyst at Charles Stanley: “What is notable by their absence are any specifics on personal taxes, which presumably won’t be unveiled until an inaugural fiscal statement. This puts the financial industry somewhat in the dark, with the line on on “giving families and businesses due warning of tax and spending policies” reassuring or ominous depending on your standpoint. It suggests changes to come, albeit housed in one fiscal event a year, rather than the current two, with individuals and their advisers at least having fair warning to prepare.”

Tim Middleton, Director of Policy and External Affairs at the Pensions Management Institute, said: “We are encouraged that the Labour Party has committed to better retirement outcomes for pension savers and that its review will seek to identify the best way to achieve this. Whilst it is unclear at this point what specific outcomes the review is going to achieve; it is important that a thorough review takes place.”