Tax and immigration
United Kingdom | UK Prime Minister calls a general election
Summary
The UK Prime Minister, Rishi Sunak, has called a General Election. It seems probable that tax and immigration will be debated at length over the coming months and that the next Government will reform existing rules.
The detail
The UK Prime Minister, Rishi Sunak, has called a General Election to take place on 4 July 2024. It is highly probable that rules relating to tax and immigration will feature heavily in debates and manifestos for all of the main parties, over the coming months.
It is too early to know precisely what will be promised to the electorate, but we expect that:
● The incumbent Conservative Party is likely to focus on immigration policies relating to asylum seekers and refugees. Prime Minister Sunak will likely come under pressure from migration sceptics in his party to promise severely cut and perhaps cap migration numbers; that pressure will be counterbalanced by economic arguments for continued flows of skilled workers, students and others to the UK. It remains to be seen where the balance will lie, but at the very least a promise to continue to reduce net migration is likely.
● The opposition Labour Party has not signalled a major overhaul of the UK immigration system but they are likely to say that sponsorship of overseas workers will be contingent on that employer investing in the recruitment or development of local workers. It is not clear how or when this investment could be evidenced. On asylum, they are likely to point to recently announced plans for a new Border Security Command and other measures to help prevent dangerous crossings to the UK (generally talked about in relation to “small boats” carrying potential asylum seekers).
● Tax policy will be one of the central levers used by all parties to try and influence votes. Following a cost of living crisis and period of high inflation – more than ever – the ability to impact someone’s take home pay is likely to carry significant sway. Whilst the tax policies may vary – an overall theme of simplicity, fairness and equality is likely to be prevalent across the parties.
● We were expecting a tax-cutting Autumn Budget from the Conservatives, but the election has thrown this into doubt. Tthe earlier election date is likely to see further tax cut promises being tabled by the Conservative leader – who will continue to feel pressure to reduce the overall tax
● Whilst the Labour Party have been vocal about how individuals face the highest tax burden in 70 years under the Conservative Government, they may find it difficult to make tax cuts, given the financial headroom available – and the difficult task of balancing tax vs spending. We can however expect to see more focus on closing perceived tax loopholes.
● One area Labour has been clear on intention to reform for some time is the non-domicile rules – and they have already stated that they will go further than the reforms proposed by the Conservatives in the last Budget. With the new rules due to come into place from 6 April 2025, an earlier Election will at least give them more time to influence the new rules effectively, if they do come into power. In either case – knowing which Party will be in power sooner, will give businesses and individuals more clarity on what the final rules are likely to be – and therefore more time to plan.
● Among the other parties, it is likely that:
○ the Scottish National Party (SNP) will call for more immigration into Scotland;
○ the Liberal Democrats Party may build on their usual push for a fairer immigration system;
○ The Green Party will likely call for a fairer and more humane approach to migration plus a refocus on taxes away from income to wealth; and
○ the pro-Brexit Reform Party are likely to lead on asylum but also promise to freeze ‘non-essential immigration, instead targeting doctors and a small number of other skill sets.
We have taken our expectations from a variety of media and other sources. It is highly likely that plans will variously change or evolve as we approach the election and we will provide a more certain briefing when party manifestors have been published.
Contact us
For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:
Lyudmyla Davies
Partner (Solicitor)
Ian Robinson
Partner
Andrea Als
Director (Solicitor)
Tom Marsom
Director (Solicitor)
Lucy Vaux
Senior Manager (Solicitor)
Ash Majithia
Partner
Conor Tobin
Director
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