A Labour Government
With a Labour Government looking increasingly likely, we look at what this might mean for the small business community we serve.
PERSONAL TAX
Income Tax
Labour has made a strong commitment that it will not increase personal tax for ‘working people’. Broadly this includes the vast majority of small business owners and we would not expect to see personal tax rise.
Both Labour and the Conservatives have pledged to keep thresholds frozen until 2028, perhaps here we might expect a Labour government to be more likely to keep to that pledge.
Capital Gains Tax
There has been no mention by Labour on Capital Gains Tax except to rule out changes to Private Property Relief on sale of individual’s home. However there is a lot of speculation that this is a tax Labour could target to increase revenues because CGT is not seen as a tax on ‘working people’.
Whilst this will not affect most business owners, it would impact anyone planning to sell their business.
BUSINESS TAX & vat
Labour has also pledged not to increase Corporation Tax and not to increase VAT.
The Shadow Chancellor is also campaigning on a pledge to build on and extend tax relief schemes such as SEIS and R&D tax credits to facilitate start-ups.
HMRC
Labour are pencilling in significant gains in public finances from bolstering HMRC to collect unpaid taxes. Almost certainly this means investment and greater resources for HMRC.
Many accountants will view this negatively for small businesses but we tend to see it another way. Most business owners want to play fair with tax but are at a disadvantage with the minority who do not. More rigorous enforcement should level the playing field.
We also hope that investment will reduce the amount of time that businesses end up wasting interacting with their creaking infrastructure.
EMPLOYMENT
The shadow government is clearly going to reform employment rights. They have published a Green Paper on the subject and whilst nothing has been promised, it is clear employers will be faced with tighter regulation and enforcement. Most focus appears to be on the aggrievous employment practices that most small business owners would never countenance, but the fear is that more regulation will add real and percieved risks for employers.
BUSINESS RATES
Labour have pledged to reduce the burden of Business Rates on bricks and mortar businesses. In fact there is a commitment to scrap the current system. Mostly likely the new regime will pull in business rates for e-commerce although there is no detail on this.
LATE PAYMENT LEGISLATION
Labour have promised to address late payments to small businesses. Whilst this will not affect all of our business community, for the minority this does impact, this is extremely welcome news that will make a material difference.
PUBLIC CONTRACTS
The manifesto has pledged to make tendering for public sector contracts easier for small business. Having seen the last Labour Government make attempts to do the same thing with limited success we wonder how impactful this will be to most small businesses.
EU RELATIONS
There is no doubt that a new government offers the opportunity for a reset on the relationship with the EU. However given that Labour has ruled out rejoining the Single Market, and the fact that many of the barriers to trade are still not fully implemented, we are not expecting a transformation to the problems businesses now have with import and export.
GROWTH
The party is making a lot of noise about boosting growth through investment in the Green economy, skills training and better access to business finance. However most commentators have questions about how much growth can be delivered.
ANTI-SOCIAL BEHAVIOUR
Sadly anti-social behaviour and criminality is a growing and disturbing new problem for our business community, especially those businesses on the High St. Labour has promised to make tackling this a priority.
CONCLUSION
The business community is extremely adaptable and resourceful. Whichever party forms the next government, I would back business owners to find a way to survive and thrive. That said our general feeling is the change of government will be good for the business community.
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