Election campaign tax update – Week Five: 22-28 June

Here is our summary of tax and related developments from the past seven days:

Speculation and claims over Labour tax plans

During the final televised leaders’ debate of the general election campaign, once again tax played a big part. Conservative Party leader Rishi Sunak continued to warn that the Labour Party will raise taxes if it wins the election, while Labour leader Keir Starmer accused the Prime Minister of ‘false’ warnings and ‘unfunded’ election pledges.

Sunak continued to claim that pensioners should expect a “retirement tax” under Labour, saying: “If you are a pensioner, you should know, there is a retirement tax coming for you”. Starmer responded: “Pensioners are not going to be better off with a Prime Minister who's making promises that he can't keep”.

The tax rise accusation has also been raised by the Chancellor, Jeremy Hunt, who wrote a letter to Shadow Chancellor Rachel Reeves, asking her to rule out tax rises in her first fiscal event (an expected autumn Budget) if her party win the election. Hunt said that he would introduce five tax cuts promised in the Tory manifesto from April next year and that no other taxes would rise if he remained in office to deliver an autumn Budget. The Labour Party dismissed the request, calling it “nonsense”.

This followed reports that the Labour Party is considering increases to ‘wealth taxes’ including capital gains tax and inheritance tax. The Guardian newspaper has highlighted a series of ‘draft documents and expert analyses’ that it says have been worked on during the election campaign and circulated among senior officials and shadow ministers. One Labour memo seen by The Guardian estimates that increases to rates of CGT could generate around £8bn for the Treasury in the long term. (While the Guardian doesn’t state that the £8bn is an annual figure that would be a reasonable assumption).

The paper seen by The Guardian also suggests that there are proposals to overhaul inheritance tax, with a possible consultation in the autumn.  Plans being considered reportedly include capping the benefit from agricultural and business relief at £500,000 for each person, rather than scrapping it. In some instances, both forms of relief could be claimed, allowing for a cap of £1m for each person in effect.  Sources said wider changes were also being considered on gifts and inheritance tax.

The paper suggests any announcements would come in an October Budget. The wording of the Guardian story suggests the documents it has seen contain options for consideration rather than representing final decisions.

Conservative-supporting media outlets have continued to amplify the Conservative Party’s claims about Labour’s tax plans. This week saw the Daily Telegraph speculate that a Labour government could start charging inheritance tax on unused pension pots. Labour has denied that the proposal is under consideration. The Telegraph has also highlighted that Shadow Work and Pensions Secretary Liz Kendall failed to rule out changes to the tax treatment of pension contributions in an interview.

Scotland - Conservatives and Alba make pitch to voters

Scotland’s parties have continued to publish their General Election manifestos, with the Scottish Conservatives and Alba setting out their plans this week.

The Scottish Conservative manifesto – Focused On Your Priorities – includes commitments to abolish the Scottish intermediate income tax rate and ensure “no worker [is] paying more tax in Scotland on their earnings than in the rest of the UK”. They would increase the starting threshold for the devolved Land and Buildings Transaction Tax (LBTT) from £145,000 to £250,000.

Because these are devolved policies, the party would only be able to implement them if they formed – or were able to influence – the Scottish Government following the 2026 Scottish Parliament election.

Alba, the party led by the former first minister Alex Salmond, published their manifesto on Wednesday. The only specific tax policy in their prospectus is a pledge to reduce the VAT rate to 10 per cent and remove VAT on energy bills entirely.

More on the Scottish parties’ tax and related policies here.

Welsh manifestos published

Both Welsh Labour and Welsh Conservative have published their manifestos this week and the pledges announced are similar to the parties’ pledges in England.

Welsh Labour plans to boost spending by raising more than £8bn in tax and suggests that with the Labour government in Westminster, they would have a ‘partner’ that shares the same ‘ambition’ for Wales. Additionally, Welsh Labour has said that working with the Labour government they will reform the business rates system in Wales.

During the launch of the Welsh Conservative manifesto, Rishi Sunak asked voters not to “let Labour waltz into office”, criticising Welsh Labour for higher NHS waiting lists than England and poorer education records. The Welsh Secretary, David TC Davies, stated that: “We have a strong record of action in Wales from cutting taxes…to delivering two freeports which will create thousands of jobs” across Wales.”

Northern Ireland parties publish manifestos

In the final weeks of the campaign, political parties in Northern Ireland have released their manifestos.

The Democratic Unionist Party has proposed the introduction of an online sales tax targeting online corporations and marketplaces, while the Alliance Party has promised to increase taxes on the super-wealthy.

The Ulster Unionist Party plans to reduce corporate tax to 15%, and the Social Democratic and Labour Party aims to increase the VAT threshold to £100,000.

Sinn Fein has called for the transfer of fiscal powers, including taxation, to the Executive in Northern Ireland.

More on the Northern Ireland parties’ tax and related policies here.

Other parties updates  

The Green Party has defended its pledge to raise taxes, claiming to be the only party being honest with the public during the General Election campaign. The party's manifesto includes increases in wealth tax, capital gains tax, and national insurance, and aims to raise up to £70 billion per year, spending £145 billion. However, the Institute for Fiscal Studies (IFS) says the party's policies are "wholly unattainable".

The Mail on Sunday explored the Liberal Democrats’ plans for CGT, with the party making a manifesto commitment to raise the tax. The paper has highlighted that the party propose different CGT rates based on the size of annual profits above a tax-free threshold of £5,000 and would also re-introduce indexation, which means only real gains above inflation would be taxed.

According to an analysis conducted for Sky News, Reform UK's tax policy favours higher incomes. While the plan to raise the threshold at which workers start paying tax to £20,000 would benefit low-paid workers, the paper suggests that the proposal to raise the higher rate threshold to £70,000 would result in a tax cut of nearly £6,000 for the top 10% of earners. This discrepancy means that the top 10% of households would gain almost £5,983 in disposable income each year, while the bottom 10% would only gain an extra £221.

Following the SNP manifesto publication last week, CIOT has warned that different rates of National Insurance for different parts of the UK could cause complications and added costs. The SNP’s manifesto stated that SNP MPs “will demand the full devolution of tax powers”, which the party claims will “enable us to create a fairer system that protects public services and invests in our economy”.

NB. This will be the final update of the campaign.