What could an Andy Burnham government mean for UK tax?

With speculation continuing over the future direction of the Labour Party, many individuals and business owners are understandably asking what an Andy Burnham government could mean for the UK tax system.

While there has been significant media coverage in recent weeks, it is important to distinguish between confirmed policy commitments and political speculation. At this stage, relatively few tax measures have been formally announced, meaning there is still considerable uncertainty.

What has been speculated about an Andy Burnham government?

Burnham has publicly stated that he intends to honour Labour’s commitments not to increase Income Tax, VAT or employee National Insurance. However, he has indicated that he would review areas such as property taxation, wealth taxes and support for small businesses, meaning the direction of travel may differ in other parts of the tax system.

In this article, we look at the areas that have featured in recent commentary as to what Andy Burnham’s tax policies might look like:

Potential increase to Personal Allowance

Burnham has hinted that he would raise the Personal Allowance for Income Tax to ease the tax burden on working people. The Personal Allowance has been frozen at £12,570 since April 2021 and is legislated to remain frozen until at least April 2028. Increasing the Personal Allowance would mean more income could be earned before Income Tax becomes payable, potentially reducing the tax burden for many individuals.

Potential reform of Capital Gains Tax

There has been speculation that Capital Gains Tax (CGT) rates could be increased to bring them in line with Income Tax rates. If this were to happen, CGT rates could increase to 20%, 40% or 45%, depending on an individual’s level of taxable income. The current rates of CGT are 18% for basic rate taxpayers and 24% for higher rate taxpayers.

In addition, there are fears of an “exit tax” being introduced on entrepreneurs who leave the UK, resulting in an upfront CGT charge on their business if they move overseas. Under current rules, an individual can move overseas and sell their business at a later date without incurring UK CGT, provided the relevant tax residence conditions are met. Applying an exit charge could result in significant tax charges for entrepreneurs looking to relocate overseas.

Possible changes to Inheritance Tax for farmers

Burnham has also indicated that he would review the changes to Agricultural Property Relief affecting farmers if he became Prime Minister.

Reform of property taxation, including council tax and land-based taxes

Burnham has expressed support for reforming the current council tax system and has indicated he is open to proposals put forward by campaign group Fairer Share which wants to replace stamp duty and council tax with an annual property tax equivalent to 0.48% of a home’s value.

This would mean a house valued at £300,000 would pay property tax of £1,440.

ISA Changes

It will be interesting to see whether Burnham goes ahead with already planned changes, including the reduction in the annual limit for cash ISA’s for the under 65’s from £20,000 to £12,000.

In addition, cash held within a Non-Cash ISA for under-65’s will attract a flat 22% tax charge from 6 April 2027. Non-cash ISA’s cannot be entirely invested in cash and cash-like assets with the permissible ratio of cash to investments currently out for industry consultation.

What about changes to Corporation Tax?

For businesses, there has been little indication that Corporation Tax rates are likely to increase beyond Labour’s existing plans.

Current speculation suggests that Andy Burnham has broadly committed to Labour’s existing manifesto pledges regarding the main business tax framework, and there has been little indication that Corporation Tax rates are likely to increase.

As a result, businesses may see less immediate impact than private individuals, although wider fiscal announcements later this year could alter that position.

Should you take action now?

In periods of political uncertainty, it can be tempting to make significant financial decisions in anticipation of possible tax changes. However, history shows that many proposed policies evolve significantly before becoming law and some never materialise at all.

Making major decisions based solely on speculation can therefore create unnecessary tax costs or unintended consequences.

Instead, now is an appropriate time to:

• Review your existing financial and succession plans;
• Ensure assets are structured efficiently under current legislation;
• Consider whether any planned transactions should be revisited once greater certainty emerges; and
• Seek professional advice before accelerating gifts, investments, or business restructures.

Looking ahead

The coming months are likely to provide greater clarity as leadership developments unfold, tax policy becomes more defined and we understand if we’ll see an Andy Burnham government. Until then, the focus should remain on sensible planning rather than reacting to headlines.

At AAB, we continue to monitor developments closely and will provide updates as further details become available. If you are concerned about how future tax changes could affect you, your family or your business, please get in touch with one of our tax specialists.

If you have any queries as speculation continues, please do not hesitate to get in contact with Tracy McGarry, Jill Walker, or your usual AAB contact.