Ahead of the General Election, Accountancy Age will be providing an analysis of the leading party’s manifestos and the impact they will have on the UK accounting industry. First up, we have the Liberal Democrats.
The Liberal Democrats have unveiled their 2024 election manifesto, “For A Fair Deal,” outlining their vision for the future of the UK.
Published on June 10th, this comprehensive document addresses a range of issues, from healthcare and education to climate change and economic reform. Central to their platform is a commitment to fairness, transparency, and sustainability.
The manifesto promises significant changes to tax policies, including corporation tax and R&D credits, aimed at fostering a more equitable and prosperous society. As the election approaches, understanding these proposals is crucial for accountants advising clients on potential impacts.
Key Tax Changes: Corporation Tax and R&D Credits
Corporation Tax
The Liberal Democrat manifesto proposes significant changes to corporation tax, aiming to raise levies on banks and reform capital gains tax.
The party plans to increase the tax burden on banks, energy companies, and tech giants, projecting an additional £27 billion in annual revenue by 2029.
This approach targets the wealthiest corporations, ensuring they contribute their fair share to public finances.
R&D Credits
Research and Development (R&D) credits are also under scrutiny.
The manifesto suggests reforms to make R&D credits more accessible and beneficial for smaller businesses. By incentivising innovation and technological advancement, the Liberal Democrats aim to boost productivity and economic growth.
These changes are designed to support a more dynamic and competitive business environment, fostering long-term sustainability.
Implications for Industry and Practice Accountants
The proposed tax changes in the Liberal Democrat manifesto will have significant implications for industry and practice accountants.
With increased levies on banks and reforms to capital gains tax, accountants must stay abreast of these developments to provide accurate financial advice.
The focus on taxing large corporations more heavily means accountants will need to reassess tax strategies for clients in these sectors.
The adjustments to R&D credits aim to make them more accessible, particularly for smaller businesses. x
Accountants will play a crucial role in helping these businesses navigate the new criteria and maximise their benefits. This involves understanding the nuances of the reformed credits and advising clients on how to leverage them for innovation and growth.
Understanding the Changes
While the likelihood of the Liberal Democrats gaining any significant traction during the general election remains slim, there is the potential for them to become the third biggest party in government which would give them a greater sway over certain policies.
There is also a chance either the Conservative or Labour governments could adopt certain promises made in the LibDem’s manifesto given how well it has been costed. As a result, accountants must first ensure they fully understand the proposed tax changes if they are to do full due diligence to their clients.
This includes the increased levies on banks, the reformed capital gains tax, and the adjustments to R&D credits. Staying informed about these changes will enable accountants to provide accurate and timely advice to their clients.
Strategic Tax Planning
With the new tax policies, strategic tax planning becomes more critical. Accountants should evaluate the impact of higher corporation taxes on their clients’ financial health and explore ways to mitigate these effects.
For businesses eligible for R&D credits, accountants should guide them on how to maximise these benefits under the new criteria.
Effective communication will be key. Accountants should proactively inform their clients about the upcoming changes and their potential implications. This includes discussing new tax strategies, compliance requirements, and opportunities for tax savings.
Context of the 2024 Election
The 2024 election is set against a backdrop of significant public dissatisfaction with the current state of public services, particularly healthcare and social care. The Liberal Democrats aim to distinguish themselves from the Conservatives and Labour by presenting a manifesto that emphasizes transparency and realistic costings.
Their focus on tax reforms and increased public spending is designed to address the pressing issues facing the UK, such as the NHS crisis and economic inequality.
As the election approaches, the Liberal Democrats’ proposals offer a clear alternative, aiming to restore public trust and deliver a fairer, more equitable society.
