The Labour Party’s election manifesto promised to keep taxes as low as possible.
Keir Starmer, who is now the Prime Minister, repeatedly said throughout the general election campaign that he would not raise taxes on ‘working people’. This includes no increases to national insurance, income tax or VAT.
However, the Labour leader made no promises about capital gains tax which is levied on the sale of assets, including second homes. Sir Keir also refused to rule out a rise in council tax which is set by town halls and has gone up by 30 per cent in real-terms since 2010.
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During the campaign, the party ruled out changing council tax bands which are currently based on the value of properties in 1991. It comes after a leading think tank revealed earlier this year that Northerners are paying £250 more than they should in council tax.
This is because property prices have risen faster in some parts of the country than others meaning council tax has been going up by much more in places like Greater Manchester than elsewhere, according to the Northern Powerhouse Partnership. For example, the rate went up by around £100 a year in each Greater Manchester borough this year, while in Westminster, it went up by around £45.
Labour has committed to capping corporation tax at the current level of 25 per cent for the entire period of this Parliament – up to five years. The party has also said it will retain support for small businesses such as the full expensing system for capital investment.
The election manfiesto says that Labour will replace the business rates system, but without raising any more tax overall. Instead, the party promises to collect business rates in a fairer way, promising a ‘level playing field’ between high street shops and online giants.
The party has however committed to raising some taxes. This includes a windfall tax on oil and gas giants which is expected to raise £1.2bn. Some of this money will go towards Great British Energy, the state-owned clean power company that Labour have promised.
Labour also said it would end tax breaks for private schools, including VAT and business rates, which is forecast to raise £1.5bn. This will be used to pay for 6,500 teachers at state schools, more teacher training, mental health support in schools and new nurseries.
In the manifesto, the party also promised to clamp down on tax avoidance and close non-dom tax loopholes which exempts UK residents who are registered as living outside the country from paying taxes on overseas earnings. This is expected to raise £5.2bn.
The party has also said it would increase stamp duty on purchases of residential properties by 1 per cent for non-UK residents. The only mention of capital gains in the manifesto is a commitment to closing a loophole which means salary bonuses are taxed at a lower rate.
However, Sir Keir said during the election campaign that people selling their main home ‘would not pay capital gains tax’ which is usually levied on second homes. When it comes to income tax, the manifesto says the basic, higher and additional rates will not rise.
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