With the General Election taking place next month, in July 2024, it seems that Labour may be on the cusp of forming their new Government, and taking power over the UK. For many, this raises quite a few questions:
- How will a changing Government impact me?
- Will I have more or less take-home pay?
- Will I be paying more tax under a Labour Government?
In this blog we’ll be exploring the above questions, but it is important to remember the below is speculation, and not financial advice. Before you make any decisions, it is always best to seek expert financial advice, to understand any changes, implications, or risks.
How will a changing Government impact me?
Regardless of which party wins the next General Election, in some way there will likely be a few changes made in financial legislation or tax, in the next few years that could impact your take-home pay. In terms of your finances, there will likely be no immediate changes, and if you’re working with a reputable Umbrella Company or payroll solution, you will be briefed of any changes well in advance.
Will I have more or less take-home pay?
First of all, it’s important to understand that the answer for this can drastically vary depending on your current income, tax bracket, and tax set-up (i.e. PAYE Employee or Self-Employed Contractor or Director).
However, in Labour’s Manifesto, there are huge commitments to several areas of Government institutions, including the NHS, that Labour has made big promises to in terms of investment and outcomes. For a new Labour Government to meet their own targets however, based on current numbers they would need to increase the current budget to meet fiscal requirements. Despite this, Labour has made very public commitments to not increase income tax, VAT, or national insurance, so here is where this money is suspected to come from if Labour get into power:
- Maintaining a freeze on income tax thresholds, meaning in some ways many people will end up paying more tax
- A new VAT model on Private School fees
- A new tax on state pension income
The big question – does this mean you will pay more tax?
This is a really big question, and it’s important to consider that the above is all based on; current manifestos, financial predictions, and online sources, which could change any time, and is ultimately dictated by the actions of Government.
However, based on the above assumptions around income tax thresholds, and private school fees, it is likely the majority of individuals will not experience a further tax burden in the immediate future, with only the highest-income individuals at risk of immediate change through a new VAT proposition on private school fees.
Are you nervous about the upcoming election and what it could mean for you or your team?
Work with Gifco today, with our 24/7 expert advice we can give you on-going support as new information becomes available.