Election manifesto recommendation: Delivering a coherent, stable and predictable tax regime

To deliver on this, the next government should focus on:

Building an internationally competitive tax system – one that will bring greater investment into the economy, help businesses find the capital they need and finance people’s short-term goals and retirement needs.

Reviewing VAT policy – modernising the current regime to better support economic growth and increase the attractiveness of the UK as an international financial centre.

Addressing the uncompetitive overall tax rate on banks to support economic growth.

Broaden the R&D regime to better capture services and drive innovation.

• Deliver a coherent, stable and predictable tax regime with a clear roadmap for tax policy over the next parliament, giving businesses and international investors a clear view of the tax implications for investments in the UK.
• Initiate and publish the promised review of VAT treatment for financial services, including an assessment of the impact of the VAT regime on the UK’s international competitiveness.

• Reconsider the uncompetitive overall effective tax rate on banks in the UK, to bolster economic growth.
• Phase out the bank levy and the surcharge, which are key elements of the UK’s internationally uncompetitive total tax rate for banks.
• Adjust and broaden the R&D regime, which is still geared toward investments in manufacturing over services, to support the development of technology in the UK, including for the net zero transition.
• Consider tax incentives, such as R&D credits or tax wrappers for long term investments, to capitalise on the UK financial services sector’s competitive advantage in innovation and accelerate the net-zero transition.