Labour Wins the Election: What the New Government's Tax Plans Mean for Your Money

On 4 July 2024, Labour won a landslide majority, ending 14 years of Conservative government. Keir Starmer became Prime Minister and Rachel Reeves was appointed Chancellor of the Exchequer — the first woman ever to hold that role. For taxpayers trying to work out what changes, and what stays the same, the immediate picture requires some careful parsing of what Labour actually promised versus what its Autumn Budget later delivered.

Labour's 2024 manifesto contained explicit "tax locks" — commitments not to raise income tax rates, employee National Insurance rates, or VAT. These were presented as the central guarantee to working people. However, the manifesto did not rule out changes to employer NICs, capital gains tax, stamp duty, or other levies — and several of these were indeed changed in the October 2024 Autumn Budget.

What the manifesto said

The headline pledges that survived into government:

• No rise in income tax rates — the 20%, 40%, and 45% rates are unchanged
• No rise in employee NICs — the 8% main rate (from April 2024) is maintained
• No rise in VAT — standard rate remains at 20%
• Income tax and NI thresholds to be unfrozen from 2028-29 — later confirmed and extended to 2030

The "£22 billion black hole" and what it meant

Within weeks of taking office, Reeves announced that the previous government had left public finances in a significantly worse state than the OBR had forecast, characterising the gap as a £22 billion "black hole." She signalled that the October Budget would need to raise taxes and cut spending to address it. The statement set expectations for changes that would technically not breach the manifesto pledges — meaning any new revenue would need to come from areas not explicitly protected.

This framing proved accurate. The October 2024 Autumn Budget raised employer NI from 13.8% to 15%, lowered the secondary threshold from £9,100 to £5,000, and raised CGT rates on shares — none of which were prohibited by the manifesto tax locks.

What changed for employees versus employers

For employees, the immediate period after the election brought no changes to take-home pay. The NI cuts delivered under Hunt remained in place, income tax thresholds stayed frozen, and the NLW increased as already legislated. The change most workers felt came indirectly — many businesses, facing higher employer NI bills from April 2025, responded by reducing hiring, limiting pay rises, or adjusting hours.

For self-employed people, IR35 rules remained unchanged. The non-dom reform announced by Hunt was confirmed and implemented in modified form. Calculate your current take-home pay at any salary to see your position under the current tax year's rules.

Conclusion

The Labour election win delivered policy continuity on headline income tax and employee NI, but significant change in the wider tax environment — particularly for employers, capital gains, and property investors. The October 2024 Budget is the more consequential document for anyone seeking to understand the tax landscape for 2025-26 and beyond. Our take-home pay calculator is updated for all current rates.