12 Apr 2024

A tale of two countries – UK and US elections

Uncertainty may have become something of the norm, but for all the questions that remain unanswered around the year ahead, there’s one thing we can be sure of... on both sides of the Atlantic, a political storm is brewing.


All eyes on Downing Street

The UK general election has been tabled to take place this year, but if rumblings from Westminster are to be believed, this could be as late as November.

Prime Minister Rishi Sunak has committed to a productive year ahead, and if the current mood music is anything to go by, we can expect a host of twists and turns as the battle for a seat in Number Ten plays out.

Regardless of who gets your vote, the implications of a new or reappointed government will be far-reaching and could well impact your pocket, portfolio and financial planning. Here’s an overview of the key pledges that you should be aware of.


School fees

Labour has pledged that one of the first things they’ll do if they come into power is to add VAT to independent school fees. Private schools will be able to recover VAT incurred on input costs such as building work, so the liability for families shouldn’t amount to the full 20 per cent increase immediately. Families who rely on trusts to fund their offspring’s education would be wise to review these, while other fee payers should ensure they can accommodate a worst case 20 per cent hike in fees, the impact of rising inflation and the growing cost of living. Some schools have a pre-payment plan in place, with discounts available for paying up front, while gifting may also be an option for grandparents looking to offer support.

Capital Gains Tax

Capital Gains Tax levels are at a historic low at present, with higher rate taxpayers paying 20 per cent on gains and 28 per cent for residential property – both of which stand well below Income Tax rates. While Shadow Chancellor Rachel Reeves has said she does not plan to increase Capital Gains Tax, a successful Labour government could accrue additional revenue by changing reliefs and exemptions.

Non-domiciled tax relief

Labour’s plans to abolish non-domiciled (‘non-dom’) tax status have been well publicised. The non-domiciled tax regime aims to limit UK tax liability for individuals who stay in the UK for less than a nominated amount of time each year. Labour’s intent to change non-dom arrangements has been well documented, but less clear, is what would replace this.


Inheritance Tax (IHT)

Deliberately less candid than their rivals, the Conservatives have alluded to dramatic changes afoot to IHT in a bid to keep voters onside. Less than 4 per cent of UK households’ estates presently pay the emotive ‘death duty’, which in the 2020-21 tax year raised a relatively meagre £5.7bn for the Government. Individually, however, the cost is dear – impacted London households paid an average of £279,167 in IHT liabilities during the same period. How the Tories could manage any reforms would undoubtedly sit with the Chancellor, and whether they reduce the threshold or abolish IHT altogether, any lost revenue will undoubtedly be accounted for elsewhere

Liberal Democrats


Taxes are a key tenet of the party’s plans to give voters a ‘Fair Deal’ if they come into power in the election. The Lib Dems have pledged that they will reverse the Conservatives’ tax cuts for major banks, abolish the Capital Gains Tax-free allowance and tax wealth income in a similar vein to income from work.


Pensions are a key tenet within the Lib Dems’ war chest. The party promises that it will protect the

controversial triple lock, which is essential for ensuring pensions rise in line with the highest value of  inflation, wages or 2.5 per cent, should they get into power. The party also sets out specific plans to support the  3.8 million women who were born in the 1950s whose State Pension entitlement was controversially revoked by compensating them in line with the recommendations of the Parliamentary Ombudsman.

Prime Minister Rishi Sunak has committed to a productive year ahead, and if the current mood music is anything to go by, we can expect a host of twists and turns as the battle for a seat in Number Ten plays out.

The battle for the White House

As always, the US general election is a hot topic around the world and the Democrat-Republican battle for power will play out in the mainstream and social media for months to come. Whether incumbent President Biden secures a further term, passes the baton to another Democrat contender or the Republicans themselves, the repercussions will be felt well beyond the US.

Regardless of who takes up residency in the White House, protectionism is likely to continue, and China will remain in focus. Biden has advanced policy limiting Chinese access to US tech, with strict trade restrictions for US firms dealing with Chinese companies. Biden’s CHIPS and Science Act also pledged nearly $53bn investment into semiconductor manufacturing, resource and research and development. With a 25 per cent tax credit also introduced for capital investments in semiconductor manufacturing, CHIPS aims to cement America’s place as a world leader in technological development and innovation.

Under a second Trump term, we expect that protectionist policies could go even further, with exclusions reaching far beyond China. A Trump presidency will likely also bring deregulation, boosting banks but bruising oil stocks.

As the Democrats and Republicans battle it out, we counter that now is not the time to splash the cash. Given recent downgrades to the US credit outlook and the rising debtto-GDP ratio, expectations for fiscal expansion are likely to reduce.

We’ll be closely following the UK and the US elections and sharing our insights on the opportunities and risks as developments unfold.

Get in contact

Ben Staniforth, Managing Director

Email: Ben.Staniforth@closebrothersam.com

Ph: +44 (0) 7519 668 120