However, it’s important to note these denials frequently refer to “current plans” which of course leaves the door open for a change of direction in the future.

With the next UK election to be held no later than January 2025, what can we expect in terms of personal taxation if the Labour party is elected?

What we won’t be seeing

No plans for a Wealth Tax

Rachel Reeves has made firm statements that there will be no wealth taxes repeatedly asserting that despite the UK being on track to having the highest tax burden since the Second World War she doesn’t believe the way to greater prosperity is through higher taxes which is also a message echoed by Sir Keir Starmer.

No plans to increase income tax or CGT

Even though Sir Keir Starmer pledged to increase the top (45%) rate of income tax in 2010, this proposal has now been shelved.

Previously Labour has opposed the 1.25% increase in dividend rates bought in as a health and social care levy. Will that opposition translate into reversal? Unlikely, if political history is anything to go by.

There has also been speculation regarding the equalisation of CGT and income tax rates following its appearance in the last Labour manifesto. In May, Reeves said she had “no plans” to equalise rates however, this doesn’t rule out rate increases to align the two taxes more closely. Nonetheless, many professional advisers remain nervous that CGT could be an area for potential reform.

No plans to change the pensions lifetime allowance (LTA)

In the Spring Budget, the lifetime allowance for pensions was scrapped with Labour almost immediately announcing that if it came to power it would reinstate the LTA.

Since then, indications have been that Labour has made peace with the scrapped LTA. However, Reeves did identify the £2trn of UK pension savings as a potential source for investment in UK listed businesses, so perhaps we will see some pension reforms under a Labour government.

No reduction in corporation tax rates

Although not strictly a personal taxation point, it does impact the way in which individuals decide to structure their wealth.

The Labour Party Conference 2022 indicated that Labour favours targeted investment allowances over lower corporation tax rates. Politically, making big companies “pay their share” has proved to be a popular message. It therefore seems likely that Labour will hold corporation tax rates at this level.

What can we expect

Limiting APR and BPR reliefs

Reeves announced that Labour will be looking to close tax “loopholes” with one area they are considering is “scrapping” agricultural property relief (APR) and business property relief (BPR).

It seems fairly unlikely that the reliefs would be scrapped in full as wholesale removal of APR and BPR would cause uproar from business owners and farmers and would seriously damage the UK economy.

However, we may expect to see a tightening of APR and BPR so that they only apply to genuine enterprises so that assets held solely for investment-purposes within these classes cannot benefit from these reliefs.

Removing, or limiting, the remittance basis

The remittance basis is an alternative tax treatment that’s available to individuals who are resident but not domiciled in the UK and have foreign income and gains.

Labour has indicated that it would bring in “a modern scheme for people who are genuinely living in the UK for short periods to allow us to continue to attract top international talent”. This may simply involve curtailing the remittance basis so that it is only available for a shorter period of residence.

Alternatively, or additionally, the concept of domicile could be removed altogether as being too subjective.

Charging VAT on school fees

The Institute for Fiscal Studies recently produced a study on the effects of this and concluded that this might result in an additional £1.3bn-£1.5bn of revenue, allowing for an extra 2% increase in state school spending. The likelihood of this policy being enacted by Reeves looks high.

Reversing stamp duty land tax (SDLT) cuts?

In 2022, the nil rate thresholds for SDLT were increased from £125,000 to £250,000. Labour criticised this change saying that it benefited buyers of second homes or buy-to-let property, a reversal may therefore be on the cards.

Tightening up on tax evasion / avoidance and increasing transparency

Labour’s Tax Transparency and Enforcement Programme includes several measures which erode the privacy of wealthy individuals and businesses.

These include policies requiring the public filing of large company tax returns at Companies House and the public filing of tax returns of wealthy individuals earning (a concept which is presumably wider than just salaries) more than £1m.

What’s next?

Currently, Labour’s strategy is to present itself as a moderate on matters of taxation. It remains to be seen whether Labour will indeed hold true to their promise not to increase taxation further given the very difficult economic climate, particularly if we see a second term for Labour in power.

This article was written for International Adviser by Sarah Wray senior associate at Charles Russell Speechlys.

The amount of money being paid to individuals providing evidence about tax fraud has increased by £14,000 from 2021/22 and up 75% from five years ago.

However, Adam Craggs, partner and head of RPC’s tax, financial crime and regulatory team, says that HMRC payments to informants is small given the size of the UK tax gap. Craggs adds that one way to encourage more information in relation to tax fraud would be to increase transparency regarding how the reward system operates, how much money is paid to informants and the number of awards made.

He also suggested that the HMRC could benefit from adopting the US approach of offering more money to whistleblowers.

The US Internal Revenue Service (IRS) pays whistleblowers 15-30% of the additional tax collected through investigations instigated as a consequence of information received. In 2022, $37.8m (£29.6m, €34.7m) was paid by the IRS to 132 whistleblowers, 58 times the amount paid to UK whistleblowers.

‘Transparent system’

Michelle Sloane, partner at RPC, said: “HMRC should increase the incentive and transparency it uses when it comes to whistleblowers. People aren’t aware of the cash incentives that exist for additional tax collected as a consequence of information received. A more formal and transparent system might incentivise a greater number of people to come forward and report tax evasion.”

A spokesperson from HMRC told International Adviser: “There will be times when it is appropriate for us to make payments to individuals for providing us with information that helps us tackle avoidance and evasion.

“We make these at our own discretion, based on what is achieved as a direct result. We value the information we receive from the public and business community. We urge anyone with information about tax fraud to report it to us online by going to GOV.UK and searching ‘report fraud HMRC’.”

HM Revenue & Customs (HMRC) will receive a further £79m over the next five years to “allocate additional staff to tackle more cases of serious tax fraud and address tax compliance risks among wealthy taxpayers”.

Research by Pinsent Masons showed that every £1 spent on investigations into the tax affairs of large businesses yields an additional £56 in tax, while investigations into wealthy individuals yield £28 for every £1 spent. The extra funding is forecast by the government to bring in £725m in additional tax.

Abigail McGregor, legal director at Pinsent Masons, said: “The Treasury knows that tax investigations are an open door it can continue to push. As long as investigations keep bringing in far more than they cost, we can expect to see HMRC continuing to get more and more resources for its compliance work.

“HMRC recognises that its ability to recoup the targeted tax revenue depends on its capacity to recruit effectively and on a timely basis, however taxpayers should keep in mind that this continuing increased investment to close the tax gap means more investigations, which can lead to more penalties and more prison sentences in the most extreme cases.”

CGT loophole

Also, within the Autumn Statement, the Treasury moved to close a loophole that allowed non-domiciled individuals to fall outside of capital gains tax (CGT) when selling shares in non-UK businesses.

The move is expected to bring in an extra £830m in tax by 2027/28. Therefore, HMRC is set to net a total £1.7bn from its various crackdowns.

As part of the CGT measures, where a non UK holding company is placed on top of an existing UK company, non-doms selling shares in it will no longer be taxed on the remittance basis, which usually results in a lower tax bill.

Instead, the non-UK company will be treated as if it was a UK company and investor gains will be subject to CGT.

Peter Morley, partner at Pinsent Masons, said: “While the government has left non-dom status unchanged, it’s interesting to see it start to make changes that will bring in more tax from non-doms.

“While the loophole that HMRC is closing today won’t affect a huge number of people, the amount of tax it is expected to raise over the next few years is quite significant.”

The Barcelona court believes she evaded around €14.5m (£13m, $14m) in tax, according to the BBC.

The singer was offered to settle the charges in July 2022, but she refused, forcing the Spanish prosecution to bring a tax fraud case against her.

If found guilty, Shakira faces an eight-year prison sentence and a fine of around €23.8m. She has reportedly denied all charges.

Her legal team said they will present their arguments “at the appropriate time”, while the singer told the Spanish edition of Elle magazine she is confident she has “enough proof to support my case and that justice will prevail in my favour”.

A date for the trial has not been set yet.

Details

Shakira is accused of failing to pay taxes in Spain between 2012 and 2014. But she claims she did not live in the country during that period of time.

Prosecutors allege this to be not true, however, because the singer bought a house in Barcelona in 2012 which became a family home for herself, her footballer husband Gerard Pique and her son, who was born in Spain in 2013.

But Shakira is not the only high-profile figure to get in trouble with the Spanish tax authorities.

Other similar cases include her husband Pique, Carlo Ancelotti, Lionel Messi, Cristiano Ronaldo, Javier Mascherano, Samuel Etoo, Alexis Sanchez, and Diego Costa.

Football manager Jose Mourinho also admitted failing to pay tax, while former Liverpool midfielder Xabi Alonso was cleared of three counts of tax fraud on 26 November 2019.

Such was the confidence of the Swiss banking giant, it only set aside €450m in its second quarter results to pay an eye-watering €4.5bn (£3.8bn, $5.08bn) penalty.

Three months later than expected, the fine has been more than halved to €1.8bn.

But it remains guilty of promoting illegal banking services and money laundering – which has left UBS licking its reputational wounds and considering further action.

‘If the decision is appealed’

In a statement, the bank said: “UBS AG was found guilty of unlawful solicitation and aggravated laundering of the proceeds of tax fraud relating to the bank’s cross-border business activities in France between 2004 and 2012. The court imposed a fine of €3.75m as opposed to €3.7bn in the first instance.

“In addition, the court has ordered the confiscation of €1bn. The court also awarded civil damages to the French state of €800m, unchanged from the first instance. The award of civil damages will be payable upon request by the French state.

“UBS (France) SA was acquitted on charges of aiding and abetting of laundering the proceeds of tax fraud and was found guilty of aiding and abetting of unlawful solicitation. The court has ordered a fine of €1.875m.

“The fines imposed on UBS AG and UBS France S.A. would be suspended if the decision is appealed.

“UBS will review the decision and consider all options, including appeal.”