Tax and the Party Conferences 2025

With a much-publicised ‘black hole’ in the public finances, Labour Ministers faced intense questioning on where tax rises might arise in November’s Budget. As you would expect with the event only weeks away, they had no intention of revealing what might be lurking in the Chancellor’s red box. 

Journalists instead pivoted to exert pressure on the Prime Minister Keir Starmer, the Chancellor Rachel Reeves and the Chief Secretary to the Prime Minister Darren Jones, to confirm that the Government would stick to its manifesto pledges not to increase VAT, National Insurance (NI) or Income Tax. As the party in power, Labour has put considerable emphasis on honouring its 2024 manifesto commitments; however recently the Institute of Directors, the Institute for Government and others have been calling for the Government to address the worsening fiscal situation by setting aside its pledges not to raise the three main taxes.

There was much scrutiny of how the trio responded to these questions. Instead of saying “we’re not going to raise Income Tax, VAT or National Insurance” or “yes we will honour our manifesto commitments” they all deliberately used the phrase “the manifesto still stands”. Darren Jones went further and said the manifesto "stands today because [Budget] decisions haven't been taken yet". Commentators reading between the lines have suggested this careful wording is Labour’s attempt to give itself leeway to break away from the manifesto and raise one of the main taxes in the Budget - particularly if the Office for Budget Responsibility (OBR) forecasts predict a worse than expected gap in the public finances. Despite this, breaking fundamental manifesto commitments would be a risky strategy politically.

Meanwhile, on the morning of her conference speech, Rachel Reeves refused to rule out an extension to the current personal tax threshold freeze. This widening of the tax base would presumably not be considered a breach of the manifesto and Labour would not be the first Government to take that position. 

For the second year in a row, the Labour conference passed a motion calling for the introduction of a Wealth Tax. Government is not bound by motions passed at conference, and last year the Chancellor ignored the motion for a Wealth Tax.

It looks likely that she will ignore this motion again. Reeves told Bloomberg the UK does not need a ‘standalone’ Wealth Tax and when asked about a Wealth Tax at a fringe event, Exchequer Secretary to the Treasury, Dan Tomlinson, echoed the Chancellor’s previous comments that although the UK doesn’t have a separate Wealth Tax, it already has a number of taxes on wealth. 

These taxes on wealth take a variety of forms, for example Capital Gains Tax, Inheritance Tax and taxes on property. There were reports over the summer that the Government was considering Dr Tim Leunig’s proposal to replace Stamp Duty Land Tax (SDLT) and Council Tax with new national and local ‘proportional property taxes’. At a fringe event Dr Leunig would not comment on whether the Government had contacted him to discuss his proposals, however, Housing Secretary Steve Reed told a conference fringe meeting that Council Tax revaluation “is not on our agenda”, saying “we’ve got enough on our hands”. It is unclear whether his comments are restricted to reform of the existing Council Tax system rather than replacing it altogether, but they may suggest changes to Council Tax might be in the ‘too difficult’ box in the upcoming Budget.

In their conference speeches the Prime Minister and the Chancellor both reiterated Labour’s key mission for government is economic growth, and that investment is the key to achieving growth and improving living standards. However, tax did not feature in the list of policies to encourage investment that Reeves mentioned in her speech (which included e.g., overhauling the planning system, launching a National Wealth Fund and signing new trade deals). 

The lack of new tax policies to promote growth is consistent with the Labour manifesto, which promised continuity and stability of the existing system as the key to promoting investor confidence. Dan Tomlinson’s comments to a fringe event that growth is at the forefront of his mind when considering tax changes may therefore be less of an indication that the Government is proactively considering tax incentives for growth, and could instead mean that any proposed tax rises should not adversely impact on economic growth (perhaps to reassure businesses in the aftermath of the Employers’ NI increase at the last Budget).

After last year's election defeat, which saw the party lose 251 MPs and elect new leadership, this year’s Conservative conference was the platform for the party to change direction from its 2024 manifesto.

The conference made the headlines for leader Kemi Badenoch’s announcement that the party would abolish SDLT on the purchase of all main homes in England and Northern Ireland, regardless of house value, to help millions achieve the “dream of home ownership”. 

She described SDLT as an ‘unConservative’ tax and said that as well as benefitting first time buyers it would help pensioners looking to downsize and the broader economy as more transactions would mean more business for movers, builders, decorators and retailers etc.

The policy, which the party estimates would cost £9 billion in 2029/30, was part of a broader package of tax cuts and spending pledges announced totalling £21 billion. These would be funded by Conservative plans to cut to public spending in areas such as welfare, the civil service and the foreign aid budget, saving £47 billion. Under a new ‘Golden Economic Rule’ unveiled by Badenoch, half of reductions to public spending would be used to cut taxes or on spending to boost the economy, while the other half would go towards reducing the deficit.

In his speech to Conference, Shadow Chancellor Mel Stride also announced the ‘First Job Bonus’ at a cost of £2.8 billion per year. Under the scheme, British nationals taking on their first job would see the first £5,000 they are due to pay in National Insurance redirected towards a personal savings fund that they could access after a five year period. In his speech, Stride said the money could be put towards a house deposit or savings for later life, but the party later confirmed it would not seek to restrict how the money can be spent after withdrawal. 

Badenoch and Stride also announced the Conservatives would:

• Reverse Labour’s policy of charging VAT on private school fees;
• Repeal Labour’s changes to agricultural and business property reliefs for Inheritance Tax announced at Autumn Budget 2024;
• Provide a 100 percent rebate on business rates up to £110,000 for most shops, pubs and leisure businesses at a cost of £4 billion per year by 2029/30;
• Abolish Carbon Price Support, a tax introduced in 2013 and levied on electricity generators using fossil fuels. The party said eliminating this ‘Carbon Tax’ would reduce domestic energy bills; and
• End the Energy Profits Levy.

The flagship tax proposal at the Liberal Democrat conference was a targeted windfall tax on banks, estimated to raise an average £7 billion per year by the end of the decade. The proceeds would be invested back into public services and create an Energy Security Bank to help cut people’s energy bills.

The policy was originally proposed by the Institute for Public Policy Research (IPPR) and the proposed tax would be time-limited and narrowly targeted at the unexpected interest payments received by the big banks due to Quantitative Easing and would not require the Bank of England to make any changes.

The party pledged an increase in the bank levy and bank surcharge in its 2024 manifesto, and a windfall tax on oil and gas producers, but no bank windfall tax, making the announcement an evolution of last year's manifesto commitments.

New policy announcements were also made in response to last year’s Autumn Budget. Conference passed a motion calling on the Government to support the hospitality sector by exempting hospitality SMEs from the Autumn Budget 2024 employers’ NI increase and by consulting on the creation of a new NI Contributions band from £5,000 to £9,100 with a lower rate, to lower the cost of employing part-time staff. Liberal Democrat Treasury spokesperson Daisy Cooper said the party remains strongly opposed to changes to agricultural and business property reliefs for inheritance tax and is arguing for a ‘family farm test’ to mitigate the impact for farmers.

Conference papers elaborated on the party’s manifesto pledge to replace the Apprenticeship Levy with a broader and more flexible skills and training levy. The party would incentivise and improve workforce training by:

• Transforming the Apprenticeship Levy into a Skills and Training Account model which would empower employers and individuals to fund training;
• Boosting the take-up of apprenticeships by guaranteeing they are paid at least the National Minimum Wage through scrapping the lower apprentice rate; and
• Introducing Skills Tax Credits with enhanced relief for priority sectors.

Other conference papers reiterated 2024 manifesto pledges to:

• Offer refunds of a portion of SDLT to house purchasers if they carry out improvements within a year of purchase;
• Reform the Energy Profits Levy;
• Reform of Air Passenger Duty (including a new super tax on private jets); and
• Abolish business rates and replace them with a Commercial Landowner Levy.

A Town Centres and High Streets consultation paper also sought views on support for an online sales tax to level the playing field between high street and online businesses.

The headline from the Reform conference is that the party appears to be reconsidering its 2024 tax manifesto pledges. Little was announced on tax during the conference and Deputy Party Leader Richard Tice told the BBC on Friday 5 September that Reform was likely to depart from its 2024 manifesto, which promised £90 billion in tax cuts, and would instead first focus on implementing savings rather than immediately cutting taxes.

The Times reported in October that party leader Nigel Farage was expected to formally drop Reform’s 2024 manifesto and replace its proposals for dramatic cuts to fuel duty, income, corporation and inheritance taxes with new policies. Farage recently told the newspaper that “At the next election, we will present a rigorous and fully-costed manifesto. Reform will never borrow to spend… instead we will ensure savings are made before implementing tax cuts. I will have more to say on all this in the coming weeks”.

With limited devolved Scottish tax powers, tax statements at the SNP conference were focused on UK government tax policy. Scotland’s Deputy First Minister Kate Forbes urged Rachel Reeves to scrap the Energy Profits Levy, which she said is costing jobs in Scotland and creating an unjust transition. She urged the Chancellor to remove the tax at the upcoming Budget rather than waiting for the tax to sunset in 2030. Conference papers also condemned the Government’s decision to increase Employers’ NI at the last Budget and called for the Government to take action to support Scottish businesses, consumers and workers, starting by scrapping this “hike in their tax on jobs”.

Although conference papers stated that Scotland is introducing the “most fair income tax levels in the UK”, a reference to income tax rises on higher earners in previous Scottish Budgets, Finance Secretary Shona Robison told a fringe event that she thinks the Scottish Government has “reached the limits of what we can do around income tax and therefore we need to look beyond that”. With limited scope for raising tax revenue from other sources, Robison encouraged the next Scottish Government, which will be formed after the May 2026 election to be “really, really bold” with public service reform.

Zack Polanski gave his speech to the party’s Conference on 3 October 2025, just a few weeks after being elected as the party’s leader. Inequality was a key theme of his address, and he reiterated the 2024 manifesto pledge for a Wealth Tax to reduce inequality and help solve the cost of living crisis. Polanski argued that the climate crisis and the cost of living crisis are the same thing, and called for policies to tackle both.

For further information please contact:

• Sharon Baynham
• Stefanie Redmond