So, the polling stations have gone back to their day jobs, TV schedules have returned to some kind of normality, and our Labour Government is finding its feet in Westminster.

Even though it is still early days in this new political era, we wanted to share some of our initial thoughts about what the next few months could hold for us all financially.

As tax consultants, we believe that change is always good at some level. But, as we said in our last email, what still remains unknown and is keeping us guessing, is just how Labour is planning to raise the £50bn they need to fund their spending plans.

As accountants specifically, we are watching and waiting to see how the tax system will be impacted.

Over recent months we have noted some interesting ‘leaks’ which we sense could be carefully coordinated pointers to what might lie ahead. The ones that have caught our attention in particular are:

Per mile charges on the roads

With the increasing number of electric cars on the roads the Treasury is facing a future shortfall from the loss of fuel duty revenue. One idea for mitigating against this shortfall is to introduce per mile charges, where drivers pay a tax for the miles that they drive rather than on the amount of fuel that they buy. The idea behind this potential charge is to keep the revenue rolling in by charging all drivers equally whether they have an electric or fuel car.

This policy was not mentioned during the election but there has been talk about a potential per mile policy for a while. In recent years the Resolution Foundation and Sir Tony Blair’s Institute for Global Change, both of which have links to the Labour Party under Sir Keir Starmer, have discussed the possibility of a per mile charge in the UK.

Lack of fuel duty is a real problem for future tax revenues, so we see per mile road charging as a real possibility.

Capital Gains Tax (CGT)

As the new Government clearly needs to raise a lot of money in a relatively short period of time it is hard to believe that CGT will be left alone.

With the rumour mill already churning out stories of potential changes to non-resident CGT on property and potentially disposing of the largely automatic exemption to CGT on the main home, CGT could easily become a target for change.

In our view, taxing the wealthy has seemed to be a key theme of the chatter post-election, so changing policies on CGT, a tax often seen as only applicable to the wealthy, is an area we are keeping a close eye on.

Inheritance Tax (IHT)

We think that it is highly likely that IHT rates will change in some format over the coming months. It is worrying that there are leaks about IHT being used as a key tool of intergenerational redistribution when in reality those with taxable IHT estates are a small minority. So, we wait to see what, if anything, will happen to IHT rules.

Without commenting on the politics, it seems obvious to us that there will need to be tax rises to fund the new Government’s spending promises. However, having ruled out rises to income tax, national insurance and VAT and with borrowing just about tapped out, there aren't that many options left.

It is still early days, so we watch and wait.

Keep an eye on our social media in the coming weeks and months as we monitor any changes to taxation. We will share our thoughts about what happens and help you to understand how any changes might impact you and what to do next.

Through all and any changes that come, we will do our best to keep you updated and informed. We remain true to our promise to help you pay the right tax, in the right place, at the right time.

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