Labour pledges to avoid raising taxes ‘on working people’
As the Autumn Budget approaches, the Government has pledged that it will “make the tax system fairer” and avoid raising taxes on working people and certain businesses.
The Government has said that it will not raise:
- Income Tax
- National Insurance (NI)
- Corporation Tax
- VAT
While Corporation Tax is not levied on individuals, the fact that the Government is not changing it may be good news for consumers.
Freezing VAT and Corporation Tax should keep a handle on price rises as businesses will not need to pass on additional costs to clients or customers.
This is a significant announcement, given that the Government seeks to make up a substantial shortfall in public finances.
What does this mean for businesses?
The budget is likely to be good news for businesses, particularly regarding VAT and Corporation Tax.
With no additional taxes to be paid in these areas, businesses may have more room to reinvest in growth – a priority for the Government, particularly in sectors such as sustainable technology.
However, some business owners may still call for the 2023/24 reductions in NI to be extended to employer NI contributions, which seems unlikely under the current Government.
How will this impact individuals?
The pledge will come as a relief to individuals who pay only Income Tax and NI, which includes most workers whose only income source is a regular salary or hourly pay.
However, individuals with additional assets such as property, private pensions, dividends or investments may reap less of a benefit.
With the Government seeking to levy additional income through taxes, these individuals will likely face an increased tax burden on their wealth through a rise in Capital Gains Tax (CGT), for example.
It is, therefore, important for those with high-value assets to engage promptly with proactive tax planning.
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