With the general election now behind us and Labour in power, Saffery, a recognised accounting firm, has started to evaluate the potential tax impacts on the farming and rural sectors.

Lucy de Greeff, director at Saffery, shares insights on what to expect based on Labour’s manifesto and related sources.

Income Tax

Labour has committed not to increase income tax rates. However, the freeze on income tax thresholds until April 2028 means fiscal drag will persist, subtly increasing the tax burden.

Capital Gains Tax (CGT)

Labour's manifesto did not address CGT directly, but Sir Keir Starmer assured during the campaign that selling your primary residence would remain exempt from CGT. Despite this, there is speculation that CGT rates could rise, although Starmer insists their plans are fully funded without additional tax increases beyond those announced.

Inheritance Tax (IHT)

Significant IHT reforms are anticipated. Changes might include less generous agricultural and business property reliefs. These reforms could start with a consultation after the summer recess.

Business Tax

A roadmap for business tax is expected within six months, outlining policies for the next five years to help businesses plan their investments. This will likely include clearer guidance on full expensing and the annual investment allowance.

Tax Avoidance

Labour aims to increase tax revenue primarily by reducing tax avoidance.

Annual Fiscal Event

Labour has pledged to have one major fiscal event annually, likely every autumn, providing families and businesses with sufficient notice of tax and spending policies.