The General Election: What Small Business Owners Need to Know

Budget, HMRC, News,

Prime Minister Rishi Sunak announced last week that the long anticipated General Election will take place on 4th July, 2024, marking the beginning of a six-week campaign period. This election brings a mix of uncertainty and opportunity, but with the date now set, we can look forward to more clarity on various fronts.

No Pre-Election Fiscal Statement

Unlike previous election cycles, there will be no pre-election fiscal statement this time. Instead, the Government is emphasising the recent drop in inflation to 2.3% as an indicator of economic improvement.

Possible Emergency Budget Post-Election

Depending on the election results, there could be an ’emergency budget’ or other significant fiscal events to establish new tax policies.

The exact timing remains unclear, but the State Opening of the new Parliament is scheduled for 17th July, with the summer recess beginning on 23rd July, so there is currently limited opportunity, though we may see adjustments to the usual Parliamentary calendar to allow for announcements.

Impact on HMRC and Government Departments

With the Government entering a ‘period of sensitivity’ (formerly known as ‘purdah’), ministers and civil servants will be cautious in making announcements or decisions that could impact the election campaign. As a result, we expect fewer updates from HMRC in the coming weeks.

A key area to watch is the Making Tax Digital (MTD) for Income Tax initiative, set to start in April 2026. HMRC has been encouraging voluntary sign-ups for testing during the 2024/25 tax year. It remains to be seen if HMRC will continue this push during the election period. Important guidance on MTD, particularly for joint property owners, may also be delayed.

Finance (No 2) Bill 2024

The Finance (No 2) Bill 2024 was progressing through Parliament and was expected to receive Royal Assent this summer. At the time of the Election announcement, it was unclear whether it would be rushed through before Parliament was prorogued, or whether it would have to wait until after the Election. It included key measures from the Spring Budget, such as tax rates for 2024/25, adjustments to the High Income Child Benefit Charge thresholds, and changes to the Capital Gains Tax on residential property gains.

The Act was passed on the 24th May.

Future of Furnished Holiday Lets and Non-Domiciled Individuals

There’s likely to be a temporary halt in updates regarding Furnished Holiday Lets (FHL) and the remittance basis for non-domiciled individuals until party manifestos are released. While this leaves affected taxpayers in a planning limbo, it’s understood that both regimes will be abolished from April 2025, albeit with potential variations depending on the election outcome.

Looking Ahead to New Tax Policies:

Political parties will soon release their manifestos, outlining their plans should they win the election. Here’s a preview of what we might expect:

Labour Party Proposals:

– Removing VAT and business rates exemptions from private schools.

– Increasing stamp duty for overseas buyers.

– Abolishing non-domicile status.

– Capping corporation tax at 25% for the next parliament and maintaining full expensing and the annual investment allowance.

– Reducing the tax gap by increasing HMRC compliance activity, investing in technology, and making more legal challenges to deter tax evasion.

– Introducing new, achievable timelines for MTD for ITSA.

Conservative Party Proposals:

– Continuing with the current government’s plans, as outlined in recent fiscal events.

– Potential reduction or complete removal of National Insurance, as indicated by Chancellor Jeremy Hunt.

– Calculating the High Income Child Benefit Charge on a household income basis.

2024: A Year of Transition

No matter the election outcome, 2024 promises to be a pivotal year in shaping the future direction of the UK. We’ll continue to keep you informed of major developments, providing the updates that we believe are most relevant along the way.

As ever, if you have any particular questions or concerns, please get in touch

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