Each main UK political party’s policies on tax explained

Each party’s taxation plans explained (Picture: Metro/Getty)

One of the key battlegrounds in the 2024 General Election- and every general election for that matter- has been the issue of taxation.

Parties across the political spectrum are keen to set out their vision for the economy, with plans to cut and spend dominating the agenda.

Setting out their vision for a low-tax economy, the Conservatives have promised to continue cutting income tax and national insurance, and have accused Labour of wanting to raise the average household tax by £2,000 a year- claims Labour have strenuously denied.

With the issue looking set to dominate debate and discussion all the way up to polling day, here’s how each party plans to tax the economy should they end up in No.10:

Conservatives

Rishi Sunak seeks to scrap national insurance and slash taxes (Picture: PA Wire)

2p cut to National Insurance

Scrap stamp duty for first-time buyers

£20 billion worth of tax cuts

Tax cuts appear to be at the heart of the Conservative manifesto, with Rishi Sunak telling BBC’s Nick Robinson during a Newsnight interview that ‘We’re going to keep cutting people’s taxes. You’ll see that in our manifesto tomorrow.

When asked if the upcoming Tory manifesto would contain even more tax cuts, Mr Sunak said he wanted to build on the tax cuts ‘we have already started to deliver’.

Chancellor Jeremy Hunt previously said that a future Conservative Government would not increase any rate of income tax or National Insurance for the duration of the next Parliament.

Mr Hunt also confirmed plans to cut a further 2p off National Insurance for 27 million people in the Spring Budget, and also expressed long-term interest in abolishing it when ‘it’s afforadable’ to do so.

Another flagship policy for Tories is their plan to scrap stamp duty for first-time buyers of properties costing up to £425,000.

The plans are also not thought to include any further increase to inheritance tax.

The Labour Party has promised not to raise income tax or VAT (Picture: PA Wire)

Labour

No increase to income tax, national insurance or VAT

End tax breaks for private schools

A ‘windfall’ tax on energy giants

Labour has been very careful to stress that they will not increase income tax or national insurance should they win the election.

Instead, Sir Keir Starmer’s party will seek to raise an extra £5 billion a year by closing the loopholes in Rishi Sunak’s ‘non-dom’ plan and crack down on tax dodgers.

Labour also claims they will invest £855 million into HMRC in order to boost tax income, which they claim will raise an additional £5.1 billion a year by the end of the next parliament.

Like the Tories, Labour has committed to keeping income tax thresholds frozen until 2028, which could place workers into higher tax bands if their wages increase in the meantime.

They have also committed to ending VAT and tax exemption for private schools, and to keeping the current rate of corporation tax capped at 25%.

Overall, Labour has extremely cautious when it comes to revealing how their taxation plans would differ from the Tories.

‘Shadow Chancellor Rachel Reeves previously told reporters: ‘I want taxes to be lower, but I’m not going to make any commitment where I can’t say where the money is coming from. I will only announce those changes when we can afford to do so’.

The Lib Dems seek to close loopholes for the ultra-rich (Picture: /Getty Images)

Lib Dems

Reform capital gains tax to close loopholes for the ultra-rich

Increase tax rate for big banks and tech/social media giants

Cut income tax by raising tax-free personal allowance

The Lib Dems seek to raise £27 billion for the economy by targeting the banks and big businesses and closing loopholes which allow the ultra-rich to avoid taxes.

Sir Ed Davey has said his party would ‘reverse the tax cuts the Conservatives have given to big banks’, and increase tax on social media firms and tech giants from 2% to 6%.

They also seek to implement a 4% buyback scheme on FTSE-100 listed companies, which they claim will ‘incentivise productive investment, job creation and economic growth.’

The party says they want to ease the cost of living crisis by increasing working people’s tax-free allowance and implementing a windfall tax on energy firms.

The Greens seek to implement a wealth tax on the super-rich (Picture: PA Wire)

Greens

Implement a ‘fair’ wealth tax which targets corporations and super-rich

Invest billions into health and social care

Large-scale green investment programme

The Green Party has pledged to raise £50 billion a year for the economy by taxing the wealthy ‘fairly’ and raising capital gains tax.

Key to their goals is a plan to introduce a wealth tax on the super-rich, which seeks to raise £16bn a year by targeting around 22,000 of the highest earners in the country.

The tax would start at 1% for wealth above £10m and increase to 2% for wealth above £1bn, and would cover wealth in all forms, valued at current market value, and assessed on all UK-resident taxpayers through an extension to the self-assessment tax return.

Also key to their plans is a mass investment campaign in green infrastructure and a VAT cut for the hospitality and arts sectors, which would be offset by increased taxation on the financial sector and provate schools.

Green Party co-leader Carla Denyer said:  ‘There is wealth in the UK. It is distributed unfairly. Our economy is failing because our wealth, rather than circulating and benefiting everybody, is held in the stagnant assets of the super-rich.   

‘Our wealth tax and wider tax proposals would also begin to tackle the desperate inequality that is a source of so many of our problems as a country. 

‘Taken together, we estimate that changes to Capital Gains Tax and National Insurance, alongside a new wealth tax, would raise over £50bn per year that would be available for the vital public investment our country is crying out for.’

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