With the UK general election on the horizon a new Government may come into power. This will lead to updates in policy and might well affect tax, VAT, business operations, wages and more.
A survey of the accountancy firms in the Corporate Finance Network (CFN) at the end of 2023 found that 80% expect the general election will have some impact on the economy and the confidence of business owners to conduct deals.
In the aftermath of the Spring Budget many businesses are expecting changes to take place, with the election thrown into the mix it’s not surprising that many businesses are feeling uncertain about how their businesses might be affected.
How can a general election affect businesses?
- Changes to regulatory frameworks: As a new government enacts new laws, businesses might need to adjust to stay compliant. This could mean changes in operations, investments and other areas.
- Adjustments to government contracts: A new government may have different budgetary priorities or ideologies from the old one. This could result in changes to government contracts, as a result businesses with existing contracts would be affected.
- Uncertainties in trade: Changes in leadership could impact diplomatic relations between countries, leading to changes in trade relations, tariffs, and other policies.
- Fluctuations in stock price: The stock market could also be impacted. Stock prices have a direct impact on market valuations of public companies. A change in the stock market could also affect retail investors, who may adjust their investment and spending habits impacting other businesses.
What are the Labour and Conservative party promising?
The UK political parties have started to release their manifestos, here’s some of the key takeaways that could affect businesses.
Tax
• Corporation Tax
Labour plan to keep Corporation Tax at its current rate of 25% and will look to lay out a plan for future business taxation.
The Conservatives are promising to ‘back businesses with lower taxes’.
The good news is – it’s likely that Corporation Tax won’t get any higher in 2024.
• Personal Tax
The Conservatives have a plan to cut personal tax should they win the election. There are also rumours that they would get rid of National Insurance all together too.
• VAT
Labour have announced that they want to add VAT to private school fees and to end tax breaks for independent schools. We’re yet to hear what regulations they plan to put into place surrounding VAT for other businesses.
The Conservatives don’t want to raise VAT if they stay elected and have been quite vocal in their response to Labour’s plans.
Sustainability
Many parties are looking into ways to encourage businesses to be more sustainable.
If Labour are elected they want to create a plan for green energy including windfall tax on oil and gas companies on their excess profits to assist with the cost of living.
The Liberal Democrats will be investing in renewable power and want 80% of the UK to be generated from renewables by 2030.
The High Street
Both Labour and Conservatives want to bring growth back to physical high street shops.
The Conservatives have put together plans and budget towards saving UK shops. Their plan includes giving life to empty buildings, supporting high street businesses, making sure there are clean and safe spaces and more.
Business Rates
If you have a non-domestic property, you may be paying business rates.
The Labour Party are looking to make big changes to business rates. This is part of their wider plan to support small businesses.
The Conservatives also want to reduce business rates, and they plan to start with the retail industry.
Get your business ready
There’s no hiding from the impending election – your business will be affected in one way or another by policy changes.
It’s crucial for businesses to be aware of new policies and to adapt accordingly. Stay on top of the general election and have a plan in place to respond.
Remember, even though elections can bring about risk and uncertainty, there can also be exciting opportunities for growth. Feeling uncertain? Drop us an email or a call and we can provide advice and support during this time of change.
Did you know…?
In 2024 there will be 65 elections across the world, that means 40% of the global population has a chance to vote. We will have to wait until 2048 for this many elections to happen in a single year again.
