Labour's plans for inheritance tax, capital gains tax and mortgages
Labour has made a series of pledges around mortgages, capital gains tax and inheritance tax
Now that Labour are in power, attention is turning to what will happen to our money under Keir Starmer’s leadership.
This week kicks off Labour’s first days in full charge and people with savings, mortgages and assets are beginning to ask what will be done for them or how changes to financial legislation could affect them in the near future.
Digging into Labour’s manifesto, the party has made pledges on mortgages, inheritance tax and capital gains tax.
Firstly, the iron clad promises: Labour has pledged not to raise any band of income tax, National Insurance or VAT rates during the next five years, apart from introducing VAT on private and independent school fees.
Labour has also promised to retain the state pension ‘Triple Lock’, which maintains state pension payout at the same rate.
Labour is also targeting keeping inflation at two percent.
Capital gains and inheritance tax
On the other taxes, Labour has promised to end non-dom status and replace it with a ‘modern scheme for people genuinely in the country for a short period’.
It will also ‘end the use of offshore trusts to avoid inheritance tax so that everyone who makes their home here in the UK pays their taxes here’.
On capital gains, Labour is planning to close a loophole which treats salary bonuses such as banker’s bonuses as capital gains instead of as income. The loophole currently means a lower rate of tax for big bonuses than income tax, 28 percent instead of 45 percent for an additional rate taxpayer.
Labour has pledged to add one percent stamp duty to properties bought by non-UK residents.
Labour also plans to strengthen HMRC with more capacity to weed out tax avoidance.
Beyond this, it has not made any specific pledges in its manifesto to raise or not to raise the rate of capital gains tax or change the inheritance tax threshold, which is currently set at £325,000.
However, Keir Starmer did say in his election campaigning that people selling their main home “would not pay capital gains tax”.
Although there are fears that the lack of guarantees in other areas could lead to rises, Sir Keir added: “All of our plans are fully funded and fully costed and none of them require tax rises over and above the ones that we’ve already announced”.
Labour’s plans for mortgages
Labour’s manifesto is also promising changes to mortgages. As well as a focus on building new homes by removing barriers to planning regulations, Labour wants to introduce a mortgage guarantee scheme aimed at helping first time buyers getting a deposit together.
It has not yet released specifics, but the manifesto says: “And we will introduce a permanent, comprehensive mortgage guarantee scheme, to support first-time buyers who struggle to save for a large deposit, with lower mortgage costs.”