Normally I hate articles that speculate about what will happen. Often, they are just trying to grab views and then you read them and come away none the wiser.
But I have decided to write one and add to the speculation, to try and forewarn you so at least you can prepare mentally if not in some other way.
This blog looks at what is currently on the table and assesses how likely this is to happen.
The attention-grabbing things proposed are:
Employment Law
Day one rights – this will give employees immediate access to unfair dismissal, sick pay and family leave. This means employers would need to be much more vigorous in their hiring practices, as a fair reason will be needed to let people go after day 1. There has been some talk of a slightly less rigorous process to let employees go in their probationary period.
Zero Hour Contracts – Labour have previously been committed to abolishing these and instead introduce a base line level of security. In recent times that ambition may have been watered down. However, I think we can expect some changes but maybe not an outright ban. Proposals now include giving employees a right to a contract which reflect the hours they regularly work using a 12-week reference period, which could allow employees to have a base line fixed number of hours and then allowing a zero-hour element also.
Pensions
Pensions Drawdowns – Currently you are allowed to take 25% of your pension tax free at the age of 55 (set to rise to 57 in 2028). During the election campaign, Kier Starma said he wouldn’t renew this in 2025, but a Labour spokesperson quickly pointed out that he had misspoken. So, it is looking likely that there will be no changes to this.
VAT on Private School Fees
Labour are committed to adding VAT on private school fees, which is devastating to those middle classes. This can potentially be mitigated as some schools are offering a ‘pay in advance’ scheme but be aware, this is not a guarantee that VAT will be avoided. Plus, any fees paid in advance will be at risk, because the school could run into financial difficulties.
Tax Changes
The new chancellor, Rachel Reeves, has not ruled out tax rises, in fact given the PR around the “black hole” in the finances left by the last government it seems we are being set up for tax rises in the near future. However, it’s too early to speculate on exactly what these rises will be , but here are some proposed changes that we have extracted from their manifesto. (if you can trust promises made in their Manifesto)
| Tax | Change |
| Corporation Tax | No change |
| VAT | Introduction of VAT on school fees |
| Income Tax | Freeze thresholds until 2028 (so effectively a tax rise due to inflation) |
| National Insurance | No increase for individuals |
| Capital Gains Tax | No solid announcements – although they have ruled out introducing CGT on the disposal of a primary residence |
| IHT | Too early to tell if any changes will be made – other than all assets in offshore trusts to be liable to IHT |
Conclusion
They say that the one constant is change, and this applies to tax and accounting. We know there is going to be lots of change as Labour try and make their mark in government, and as usual we will be there to support you and your business when these changes kick in.
