Skip to content

The Labour Party's Manifesto: What does it mean for private clients and UK businesses?

As the United Kingdom approaches its general election on 4th July, Keir Starmer’s Labour Party looks set for victory. Labour’s manifesto, unveiled on 13th June, outlines several key tax policies with significant implications for private clients and the businesses they manage. This article reviews the primary tax-related policies Labour proposes and explores their potential impact.

Written by Andrew Sams

The Labour Party's Manifesto: What does it mean for private clients and UK businesses?

24 June 2024

Sign up to our newsletter for regular insights from the Hundle team.


ABOLITION OF NON-DOM STATUS: Labour confirmed they will abolish non-dom status and remove the IHT benefit of offshore trusts. There is some room left open that the ‘short-term’ residence test will be increased from previously announced 4-year window. We are already seeing evidence of non-doms leaving the UK in response.  

PRIVATE EQUITY & CARRIED INTEREST: Labour’s proposal to tax carried interest as income, except where fund managers risk their own capital, may diminish the UK’s attractiveness for private equity investors. The projected revenue of £565 million annually seems optimistic given potential behavioural shifts among private equity executives. 

VAT ON PRIVATE SCHOOL FEES: Imposing VAT on private school fees is expected to raise £1.5 billion but could make private education unaffordable for many, potentially straining the state education system. For UHNW families, this could alter the landscape of private education, leading to higher fees and reduced services. 

BUSINESS TAXATION: Labour’s promise to cap corporation tax at 25% aims to provide stability, which is welcome news for businesses. However, the commitment to OECD’s global tax reforms might increase compliance costs. 

REAL ESTATE: The proposed increase in Stamp Duty Land Tax for non-resident buyers from 2% to 3% is intended to prioritise housing for UK residents, but it could negatively affect property investment dynamics and property values. 

CGT: The absence of any mention of Capital Gains Tax rate changes leaves room for speculation about future policies. 

CONCLUSION: Labour’s manifesto, while aiming for stability, is light on specifics, leading to significant uncertainty. Clients should proactively review and be ready to potentially restructure their financial affairs with advisers to navigate these anticipated changes. 


Labour’s manifesto includes a firm commitment to abolish the tax legislation relating to non-domiciled (non-dom) individuals, effectively removing the non-dom tax status and well-established remittance basis of taxation. This policy is a cornerstone of Labour’s broader tax strategy and has significant implications for certain UHNW individuals residing in the UK.


Broadly, under the current rules, non-UK domiciled individuals who are tax resident in the UK can be taxed under the ‘remittance basis’ of taxation. This means only their income and gains arising in the UK, or those remitted to the UK, suffer UK tax. In addition, generally, such non-UK domiciled individuals are only subject to UK Inheritance Tax (“IHT”) on their UK situs assets.

This is compared to a UK domiciled and tax resident individual who is taxed on their worldwide income and gains as they arise. They are also subject to IHT on their worldwide assets (i.e. no limitation to just UK situs assets).


The Labour manifesto states unequivocally that non-dom status will be abolished and replaced with a “modern scheme for people genuinely in the country for a short period”. While previous announcements have noted that a ‘4-year rule’ will apply, this choice of wording, notable by its absence of such specificity, leaves open the possibility that this ‘window’ may be extended beyond a 4-year timeframe. The author hopes that this will be extended to something which is much more internationally competitive, such as the Italian regime offering a 10-year window.

Key aspects of the proposed changes include:

ELIMINATING THE REMITTANCE BASIS: Labour proposes to end the remittance basis, thereby taxing all UK tax residents on their worldwide income and gains as they arise rather than just UK source income and gains, or those remitted to the UK​​.

IHT & OFFSHORE TRUSTS: Labour have noted that offshore trusts will no longer provide a shelter for IHT. So called “excluded property trusts”, the assets of which are not subject to UK IHT, would no longer be viable. However, it is unclear whether such a change would be retrospective or not. and whether grandfathering could apply for existing trusts. Whilst the change in any guise is unwelcome, the author hopes that a more measured approach of grandfathering existing trusts would be introduced.

Labour’s approach contrasts with the Conservatives’ plan, which also includes abolishing the non-dom status but provides for certain transitional reliefs.  These include taxing only 50% of foreign income in the 2025/26 tax year for current non-doms who would not qualify for the ‘four-year FIG regime’ (i.e. for the first four tax years of UK tax residence, no UK tax would be suffered on any foreign income or gains)​​. Labour has criticised these transitional arrangements as insufficient, in contrast to the more stringent regime that they have proposed.


The abolition of the non-dom status is designed to raise substantial revenue for Labour’s policy commitments, with projected additional tax collections amounting to £5.23 billion by 2028-29 noted in their manifesto. This underscores the central role that the non-dom reforms play in Labour’s fiscal strategy, albeit it feels an overly ambitious revenue target based on assumptions around non-dom behaviour that may not ring true if a far shorter 4-year timeframe is introduced.

For those impacted, the abolition of the non-dom status represents a significant change in their tax liabilities:

INCREASED TAX BURDEN: Non-doms will face UK tax on their global income and gains, which could substantially increase their overall UK tax burden. This change will necessitate a comprehensive review of their balance sheets, asset holding structures, objectives, and future financial planning strategies. For some, it may prompt a review as to their future residence plans and whether to cease UK tax residence altogether.

TRUSTS & IHT: The removal of the excluded property status for offshore trusts will have far-reaching implications. Trusts that were previously protected from IHT could now be subject to periodic charges and IHT on distributions, subject to whether grandfathering provisions are introduced. This change may lead to a restructuring of existing trust arrangements or even the unwinding of trusts, which could be both complex and costly. It may also lead to a tax migration of settlors and/or beneficiaries of certain trusts​​.

The uncertainty surrounding the exact nature of the replacement regime and the lack of detailed guidance on how existing structures will be treated are causing significant concern within the UHNW community. This uncertainty is already leading some individuals to consider relocating from the UK, which could result in a loss of investment and economic activity that these individuals contribute​​. Henley & Partners estimate that the UK will lose 9,500 more millionaires than it gains this year, well over double the outflow of 2023, and almost seven times the actual number that quit the UK in 2022.

Additionally, the proposed changes could make the UK less attractive to new UHNW migrants. Other countries with more favourable tax regimes, such as Italy, Greece, and Dubai, may become more appealing, potentially leading to a shift in the destination of global wealth​​.

We are urging clients to evaluate their positions and consider potential responses to the proposed changes. Some might need to accelerate plans to establish tax residency in other jurisdictions and/or have prepared a contingency plan to restructure their financial affairs to mitigate the impact of the new rules, so they can be ready to ‘press the button’ once further clarity has been obtained.


Labour’s manifesto promises a significant shift in the tax treatment of carried interest, which will have notable implications for the private equity industry. Currently, carried interest—profits earned by private equity managers from successful investments—is taxed as a capital gain at rates of up to 28%, rather than as income, which would attract income tax at a rate of up to 45% plus National Insurance Contributions of 2%​​​​. Labour aims to close this “loophole,” as they term it, by taxing carried interest as income, except in cases where fund managers have invested their own capital.

This is clearly a significant change but should be viewed as a further continuation of the various substantial changes to the taxation of carried interest that were introduced in 2015 and 2016. This legislation sought to tax ‘short-term’ (broadly, where the average holding period for underlying assets of the relevant fund was less than 40 months) as “Income Based Carried Interest” charged to income tax rates.


Shadow Chancellor Rachel Reeves has clarified that Labour’s proposed policy will distinguish between situations where private equity executives risk their own capital and those where they do not. If fund managers invest their own money into deals, their earnings will continue to be taxed as capital gains. Conversely, if they do not risk their capital, these earnings will be taxed as income​​​​.

This nuanced approach is intended to address what Labour sees as an inequity in the current tax system, where performance-related pay in private equity is the only sector where it is treated as capital gains rather than income. Reeves has emphasised that the preferential treatment should only apply when there is a genuine financial risk involved for the executives​​.


The proposed changes are expected to raise approximately £565 million annually by 2028-2029​​. This figure is derived from research by the Resolution Foundation, which estimated the revenue from taxing carried interest as income, adjusted for inflation and recent earnings data. However, these projections do not account for potential behavioural changes, such as private equity executives relocating from the UK to jurisdictions with more favourable tax regimes​​.

The reactions from the private equity industry has been mixed; disappointment at further changes to the taxation of carried interest despite the plethora of amendments made in 2015 and 2016, but also relieved that the ‘less harsh’ option of a co-investment style regime would be adopted akin to that in other European countries. Many in the sector appreciate the recognition that investment risk should be rewarded with favourable tax treatment. The British Private Equity & Venture Capital Association (BVCA) and other industry leaders have welcomed this aspect of Labour’s approach, seeing it as a potential continuation of the UK’s competitive edge in attracting and retaining top talent in private equity​​.

However, there are concerns about the broader implications. If Labour’s policy leads to a significant portion of carried interest being taxed as income, it could diminish the attractiveness of the UK as a hub for private equity. This sector is vital not only for the financial services industry but also for the broader economy, given the significant capital investments it directs into UK businesses.


As alluded to above, Labour’s approach is somewhat aligned with tax regimes in other European countries. For example, France and Italy allow reduced tax rates on carried interest if fund managers invest a significant portion of their own capital, typically around 1% of the fund’s value​​. This co-investment model ensures that tax benefits are tied to genuine financial risk, maintaining a fair and competitive landscape.

Implementing a similar regime in the UK could involve determining appropriate investment thresholds and ensuring that the invested capital genuinely comes from the executives’ own resources, rather than through mechanisms like non-recourse loans which shield personal wealth. Labour would need to navigate these complexities to ensure the policy’s effectiveness without unduly burdening the industry.


Labour’s projected revenue from the carried interest tax reform appears ambitious. The £565 million figure is based on optimistic estimates and does not fully account for potential shifts in behaviour among private equity executives.

Despite this, the wide gap between Labour’s projections and the more conservative estimates allows some fiscal room to accommodate these behavioural changes. If the policy leads to even a moderate increase in tax revenues without significant emigration of talent, it could be considered a success.



The imposition of VAT on private school fees, alongside the removal of business rates relief for private schools, is another significant proposal​​​​. Labour estimates this policy c\ould raise £1.5 billion, but it is expected to be damaging families using private education. For many families, this could render private education unaffordable, potentially leading to an influx of students into the state system and putting additional pressure on public resources.

For UHNW families, while the immediate financial impact may be absorbable, the broader implications include potential changes in the landscape of private education. Schools may need to increase fees, reduce services, or find alternative funding strategies, which could affect the quality and availability of private education.


Labour’s stated approach to business taxation focuses on stability, with a pledge to cap the corporation tax rate at 25% for the next parliament​​​​. This cap aims to provide certainty to businesses, encouraging long-term investment. Additionally, Labour plans to retain the full expensing system for capital investments and maintain the Annual Investment Allowance for small businesses.

Labour also supports global tax reforms under the OECD’s guidelines, including the global minimum corporate tax rate and measures to ensure multinational tech companies pay their ‘fair share’​​. These policies aim to create a fairer tax environment but may also increase compliance costs and administrative burdens for businesses.

The creation of a National Wealth Fund to channel private investment into British businesses and a mandate for pension funds to increase investment in UK markets are notable initiatives​​​​. These measures are designed to stimulate domestic investment and economic growth, potentially offering new opportunities for UHNW investors to align their portfolios with national economic objectives.


Labour plans to increase the Stamp Duty Land Tax surcharge for non-resident buyers from 2% to 3%​​​​. This increase is intended to curb the purchase of residential properties by overseas investors, aiming to prioritise housing availability for UK residents. While the immediate impact on property prices may be modest, the long-term implications could include a shift in the real estate market dynamics, potentially affecting property values and investment strategies for both domestic and international investors.


Conspicuous by its absence, there is no mention of Capital Gains Tax (“CGT”) – it is explicitly stated in the manifesto that income tax, National Insurance, VAT and corporation tax rates will not be raised but there was no mention of CGT. Whilst comments have been made by both Rachel Reeves and Sir Keir Starmer that they have ‘no plans’ to increase CGT rates, it has notably not been ruled out.


A key theme for Labour, which is reflected in the language used in their manifesto, is the desire to create a stable tax environment – particularly for businesses. Despite this, the manifesto remains light on detail, which results in a high degree of uncertainty. The parameters and timing of key policies, including the non-dom rule changes, treatment of carried interest, and the imposition of VAT on school fees, are largely absent. It is unlikely that we will have more details on these policies until the Autumn Budget. The silver lining is Labour’s commitment to not raising income tax, National Insurance, or VAT but this is somewhat diluted by the increase in range of applications of such taxes (e.g. no more limitations to just UK source or remitted income for non-doms, and VAT applied to school fees).

As always, it is crucial for our clients to stay informed and proactive in their financial planning. The potential changes underscore the importance of strategic advice and careful consideration of how to best navigate the evolving tax environment. We would recommend that all of those potentially affected review their balance sheets closely with their advisers to ensure the specific impacts for their personal circumstances are known and understood with contingency plans put in place, where appropriate.

Hundle remains dedicated to providing expert guidance to help our clients manage these challenges and act on new opportunities as and when they arise.


Andrew Sams works closely with our clients to gain a deep understanding of their wealth structuring needs. He has over 15 years’ experience of advising Ultra High Net Worth individuals and families on wealth structuring, tax, and multi-jurisdictional wealth planning matters. Prior to Hundle, he served UHNW families and their businesses in the private client team at Deloitte. You can contact Andy at