News | July 5, 2024

General Election analysis – impact on private clients

On the back of the historic landslide result in the General Election for the Labour party, we give our initial reaction to what a new Labour government means for private clients in terms of personal taxation and estate planning.

Our commentary below is based on Labour’s manifesto and campaign messaging; we will need to await further details in the King’s Speech on 17 July and an expected Autumn Budget for a clearer indication of Labour’s direction on these issues and the immediacy of any changes. For our analysis of Labour’s manifesto pledges on tax policy, please click here.

The key areas of impact for private clients, as we see them at the moment, are as follows.

  • Capital gains tax (“CGT”) –  a possible increase in CGT rates
  • Carried interest – rate of tax may increase to 45% in some cases
  • Inheritance tax (“IHT”) –  changes unlikely early on but business and agricultural assets could eventually be targeted
  • “Non-dom” taxation – will be further tightened up from April 2025
  • Offshore trusts – IHT benefits likely to be curtailed
  • Value added tax (“VAT”) on school fees – expected to be introduced but timing unclear


Sir Keir Starmer has repeatedly refused to deny an increase in CGT rates, and the Labour manifesto was silent on the topic. This, along with the fact that Rachel Reeves has previously shown support for aligning CGT with income tax rates, mean increases to CGT rates are widely predicted.

Those with sizeable investment gains may want to start considering whether to realise profits at current CGT rates, before an Autumn Budget.

Carried interest

The Labour manifesto included the pledge to close the carried interest “loophole” so that performance-related pay within the private equity industry is no longer treated as capital gains and taxed at 28%, but as income and taxed at up to 45%. Indications are that this pledge may be watered down by Rachel Reeves who has said that where fund managers put their own capital at risk alongside investors’ (a “co-investment” approach), carried interest would still be taxed at CGT rates; and there will be a consultation on any changes. This policy is very much tied up with Labour’s approach to CGT rates (above).

If a consultation is to be issued, it looks like carried interest will not be one of the pledges that Labour can introduce quickly; but those affected should keep a watch on developments, and the publication of the consultation.

“Non-dom” taxation

In respect of the taxation of non-UK domiciled individuals (“non-doms“), the tax regime for whom is due to be tightened up from 6 April 2025 (as already announced by the Conservative government), the Labour manifesto confirmed their intention to abolish non-dom status but exact details of a replacement regime are unclear.

Unfortunately, non-doms may not receive any meaningful detail before the Autumn Budget and should be prepared to be reactive to developments over the next few months. In the meantime, those affected could start an initial analysis of comparing the new UK regime (based on what we know) with those of potential relocation jurisdictions.

Our “2024 Budget: Non-Dom Changes” hub on our website contains more information about the non-dom reforms and how our Private Client Offshore team can assist with any relocation planning.

Offshore trusts

The Labour manifesto included a pledge to “end the use of offshore trusts to avoid inheritance tax”. This is likely to refer to the Conservatives’ proposal that offshore “excluded property” trusts of UK resident non-doms can remain outside the scope of IHT if set up before 6 April 2025.

Non-doms who had been considering setting up an offshore “excluded property” trust to help manage their IHT exposure, should now not do so for IHT reasons alone. Once further details are announced,  we can assist clients with existing offshore trusts in reviewing the IHT impact on the structure.


There was no mention of IHT in Labour’s manifesto, so changes cannot be ruled out; although it would be a surprise if this features early in Labour’s tenure.

Clients who have valuable business or agricultural property qualifying for IHT relief may want to consider accelerating plans to gift such property to the next generation, if circumstances are right.

VAT on school fees

As one of Labour’s flagship policies, the introduction of VAT on private school fees is likely to be a policy the new Labour government looks at early on; however, it is doubtful that the change could be introduced in time for the next academic year (September 2024).

Affected clients could look at payment of school fees in advance; however, this may fall foul of any retrospective legislation. An alternative solution is a shift of generational wealth, from grandparents for example, to help fund school fees as part of an overall long-term succession plan. Education trusts can be used to provide funds for schools fees and take advantage of specific tax exemptions.