Adrian Young, a tax partner at independent accounting and business advisory firm HURST, looks at what the election of a new government means for our region's businesses.听
Now that the long-predicted Labour win has come to pass, focus in the north west business community is turning to what it all means in practice.
Tax was front and centre of the election build-up, and it formed a key plank of the Tories鈥� attack on Labour. Labour for their part held up a mirror to Tory accusations by reminding us that taxes are at a 70-year high after 14 years of Conservative government.
But now that we know who will be calling the shots, we can start to look more closely at how new Chancellor Rachel Reeves will approach the job, and what this will mean for taxpayers.
Having spoken at length to local business leaders, it is clear that stability is the most valued attribute Reeves can bring. The economy has faced fiscal turmoil over the last few years, not least with rising tax burdens and Liz Truss鈥檚 ill-fated but short-lived experiment. As a result, the businesses I speak to crave predictability above all else.
I would therefore like to see a period of reflection before any material calls are made by the incoming government with regard to tax.
As it is, the staging of the election in early summer gives Reeves precisely this time to reflect. In addition, given that the Office for Budget Responsibility (OBR) needs a minimum of 10 weeks鈥� notice to prepare meaningful feedback for a fiscal event, this appears to push things into perhaps September.
Given that the Labour manifesto commits the party to obtaining OBR support for budgetary announcements, it does seem that early autumn is a more likely time for major policy changes.
That said, there is nothing to prevent Reeves from providing a steer in the interim. So, what can we expect?
Some headlines have already been heavily trailed. We can therefore expect minimal short-term changes to income tax and national insurance, the key tax raisers. Labour have also promised not to increase VAT rates, although we do know that they are planning specific measures such as subjecting private school fees to VAT. Whereas this is without doubt a minority sport, it has grabbed headlines.
Overall, the key election pledge from Labour was to not raise taxes for 鈥榳orking people鈥�.
This was deliberately vague and gives plenty of room for manoeuvre, should Reeves require it. In addition, whether the new Chancellor takes other tax-raising measures, in areas such as corporation tax or capital gains tax, remains to be seen. These would potentially be easy targets politically, given the focused promise to working people rather than employers or businesses.
In summary then, I think we can expect to see Labour鈥檚 tax plans gradually coalesce over the summer months in the build-up to an early autumn budget which will set the tone as the incoming government starts to find its feet. It remains to be seen whether Reeves delivers on her promises of a lighter-touch growth platform or whether, as Rishi Sunak the outgoing prime minister repeated, Labour reverts to type with a tax-and-spend agenda.