Conservatives vs Labour – General Election 2017 – Business Policies
Written by: Keith Tully
Reviewed: Monday 5th June, 2017
Unprecedented challenges lay ahead for the next elected party, not least of which is the provision of a secure base from which UK businesses can thrive. So firstly, how would the Conservative manifesto affect businesses and the economy if the party was re-elected?
Conservatives
Business tax
The Conservative government plans to retain the current rate of corporation tax at 19% until the financial year commencing April 2020, when it would be reduced to 17%. They also want to simplify the current tax system for small businesses and the self-employed.
Corporate pay
Listed companies will need to publish the ratio between chief executive and average pay as part of their annual reporting duties. Shareholders will also have strict voting rights to sanction executive pay deals.
Late payments
Smaller businesses will be offered protection by ensuring large contractors abide by the Prompt Payment Code, both on government contracts and in the private sector.
Business rates
The Tories are planning a full review of the business rates system to ensure fairness, and to address the current problems. This would include the introduction of more frequent revaluations, and the potential for self-assessment within the valuation process.
Employment
- The National Living Wage would rise to “60% of median earnings” by 2020, and then linked to median earnings ongoing
- Protection for workers in the ‘gig economy’ would be provided, as regards their employment status
- Additional employment rights for workers would be introduced, including a year of unpaid leave to care for a relative
Labour
Labour’s manifesto, entitled “For the Many, Not the Few,” includes significant changes in relation to businesses and the economy.
Corporation Tax
Labour will ignore the planned schedule laid out by the Tory government, intending to reverse many of the corporation tax cuts introduced over recent years. The main rate of corporation tax would rise steadily to 26% by 2020/21.
Smaller limited companies with annual profits under £300,000 would be offered protection from these rises following re-establishment of the small profits rate of 20% in 2018/19, and 21% in 2020/21.
Quarterly reporting to HMRC
Small businesses with a turnover of less than £85,000 would be excluded from the obligation to provide quarterly reports.
Late payments
Labour has stated their intention to clamp down on late payments within the public and private sectors, by:
- Requiring all companies bidding for public sector contracts to pay their own suppliers within a 30-day timescale
- Persistent late-payers will face a system of binding arbitration with fines
Business funding
The National Investment Bank and regional development banks will be charged with proactively identifying funding gaps, meeting the needs of businesses unable to secure finance via ‘traditional’ banking routes.
Business rates
Labour wants to introduce changes to the business rates system, including:
- Changing the method of measuring inflation from RPI (Retail Price Index) to CPI (Consumer Price Index)
- Discounting investments in plant and machinery from business rates valuations
- Assisting businesses facing huge rises in business rates via a transitional relief fund
- Changing the appeals process to allow faster access, and facilitate speedier decisions
- Reducing the time between valuations so businesses do not face such huge increases
Employment
Labour intends to:
- Ban zero hours contracts
- Bring the National Minimum Wage in line with the National Living Wage for workers aged 18 and over
- End the public sector pay cap, and introduce pay rises for public sector workers in line with inflation
- Ban umbrella companies
- Introduce legislation whereby workers are automatically assumed to be employees rather than self-employed
Our experts at Real Business Rescue are available to provide more information on how your business may be affected following the General Election. Your initial consultation is free-of-charge, and we operate from 46 offices around the country.
Author
Keith Tully
Partner
Keith has been involved in Business Rescue since 1992, during which time he’s worked for both independent and national firms. His specialties include company restructuring matters and negotiating with HMRC on his clients behalf.
