As we approach the first Labour Budget on 30 October, tax takes centre stage as we consider the most likely announcements and new consultations. At the same time, many consultations initiated by the previous government remain unresolved without a clear action plan, creating uncertainty for taxpayers. We considered four main areas where Labour might make progress – encouraging business investment, indirect taxes, personal and employment taxes and tax simplification.

Encouraging business investment

The Labour manifesto confirmed Labour’s commitment to retaining permanent full expensing for main-rate plant and machinery assets. Labour have also made statements regarding simplification and certainty on capital allowances, including the possibility of advance rulings for major investment projects. We anticipate capital allowances will feature in the business tax roadmap, though, as with the further reforms considered by the previous government including the extension of full expensing to assets provided for leasing, the timing of any changes will be subject to favourable fiscal conditions.

While the Conservative government largely completed the reform of the creative sector reliefs, the enhanced relief for visual effects, due to take effect from 1 April 2025, is not yet legislated. Given Labour's "warm welcome" of the Budget 2024 announcements on the creative sector reliefs, we expect this to move forward.

Details of some freeports and investment zones (particularly those outside England) await confirmation. While we believe the new government is unlikely to overturn this policy given the significance to traditionally Labour areas, there is scope for modifications to enhance effectiveness, including greater transparency and expedited delivery.

Further to the initial call for evidence on introducing a corporate re-domiciliation regime, an expert panel was convened in 2023, but it is not clear whether and how this will be taken forward.

Indirect taxes

The consultation on the UK Carbon Border Adjustment Mechanism closed in June 2024 and the most we could expect is a summary of responses to the consultation at the Autumn Budget, as there is still time before the regime’s start on 1 January 2027.

VAT on private school and boarding fees is one of the headline Labour policies and there is a consultation on draft legislation and a technical note. However, there are over ten outstanding indirect tax and customs consultations where the outcome is still being awaited.

The outstanding customs consultations cover four separate areas - the future of customs declarations, low-value post and parcel exports, temporary admission and voluntary standards for customs intermediaries. These consultations relate to simplification and removing barriers to trade, so the government may choose to proceed with these points.

The remaining indirect tax consultations, including simplification of land and property VAT rules, simplifying partial exemption, and the Capital Goods Scheme, deal with administrative issues and/or the topics are under review with a view to making improvements to the operational aspects of this part of the indirect tax legislation. We do not expect the government to have a policy (or political) reason to abandon these, but equally these topics are unlikely to be high on the priority list.

Personal and employment taxes

The two headline Labour tax policies - abolition of the non-dom regime, and changing the tax treatment of carried interest – are progressing as intended, with more detail expected at the Autumn Budget.

Employment rights also featured in Labour manifesto and the King’s Speech, so it would be unsurprising to see some developments here soon. The 2023 umbrella companies consultation had wide-ranging proposals, but while Labour are likely to be in favour of strengthening enforcement of employment rights for umbrella company workers, they will need to consider how this fits with their manifesto pledges such as the creation of a single enforcement body for employment rights. We may see more proposals, including a more detailed consultation, possibly at the Autumn Budget.

A single worker status, part of Labour’s manifesto, may materialise in the medium to long-term and would require significant policy work.

Two other Conservative policies are expected to progress – on the mandatory payrolling of all benefits in kind, we are likely to see further details by the Autumn Budget and implementation in April 2026, and there is a consultation on draft legislation on abolition of the Furnished Holiday Lettings tax regime.

The following consultations closed under the previous government and we waiting to see how the current government intends to proceed:

• Taxation of ecosystem service markets – several actions were planned but not implemented following consultation. The Labour manifesto promised a land-use framework, to make environment land management schemes work for farmers and nature; however, more details is needed to give clarity to farmers and other landowners.
• Taxation of decentralised finance and implementation of the OECD cryptoasset reporting framework (CARF)).
• A targeted reform of Employee Ownership Trusts (EOTs) and Employee Benefit Trusts (EBTs) to ensure they encourage employee engagement.
• Introduction of a new UK Individual Savings Account (ISA).

Moreover, while Conservatives stated their intention to consult on operating the child benefit on household basis, Labour have never given any indication of their position.

Finally, there are two areas under review which we currently do not expect to progress:

• Tax advantaged employee share schemes – the call for evidence on Save As You Earn and Share Incentive Plan closed in August 2023. A reform may be costly and so may be less likely.
• Tax incentives for occupational health – again, tangible incentives would be costly and thus unlikely to be high on the government’s agenda.

Tax administration and simplification

There has been a lot of focus on improving the efficiency of tax administration to reduce the tax gap, as well as on tax simplification to boost productivity and growth, hence we expect some ‘work in progress’ initiatives in this area to be to be picked up by the current government.

During the last few years, HMRC and the Treasury have consulted on several matters within a wider tax administration framework review, including information and data, legislative pilots and HMRC enquiry and assessment powers; all of these are currently awaiting a summary of responses. The current government has not stated its intentions, but we would expect the work to continue.

Making Tax Digital is a key element of HMRC’s digitalisation journey, though it was delayed for both income tax and corporation tax under the previous government. Labour have not made any specific announcements, so we expect work to continue as planned.

 However, a couple of areas remain open with no indication of current government’s plans:

• Public access to information about trusts - Regulations to enable public access to information about certain trusts that own UK land were in the process of being enacted and a consultation on widening public access to trust information in general is awaiting a government response.
• A response to a call for evidence on a proposed requirement for individuals to pay their tax in instalments throughout the tax year was published in 2021, and a further consultation was expected but has not taken place.

The Office for Tax Simplification (OTS) completed a number of reviews in 2021-2022 (including taxation of property income, capital gains tax, making better use of third party data, moving the end of tax year and hybrid and remote working) and, while the Conservatives acted on some of the recommendations, many remain without a response. Given the OTS is no longer in existence, it is not clear whether any further action will be taken in respect of these reviews, but given the focus on tax simplification, Labour may choose to revisit some of the OTS recommendations.

To conclude, it is obvious that there are numerous open consultations inherited by Labour from the previous government which add to the level of uncertainty in the UK tax landscape. Setting out the government’s intentions on each of these, including where the government does not intend to take any action, will go a long way to provide much-needed certainty to taxpayers. The Autumn Budget would be a perfect opportunity to do so, especially as new consultations are added to the list.