Whatever the result of the forthcoming General Election its impact will be widely felt across the UK economy. The longer-term view suggests that any merger or acquisition deals in flight post-polling day are likely to be somewhat impacted as potentially new Business and Economic policies/legislation are brought before Parliament.

It is worth considering the implications of a Labour Party victory, including winning the overall majority, the odds of which according to some bookmakers are ‘fifty-to-one on’, the best odds of any UK political party (and something not enjoyed by the Labour Party since the days of the Blairite movement).

The Labour Party’s election manifesto suggests they will introduce legislation to penalise the favourable tax treatment received by Private Equity firms, which will present a significant challenge to Deal Makers, Company Owners and Shareholders alike.

The Labour Party pledge specifically targets ‘carried interest’ from deals, which is taxed at a lower rate than income tax, something that is viewed as an unfair tax advantage/loophole for the many thousands of investors that benefit from the regime.

To contrast this rhetoric, there have been positive comments on Annual Investment Allowances and Corporation Tax, with the latter possibly capped at the current 25% for the next Parliament, (only being reduced if required to shore up the UK’s global competitiveness).

Clearly, moves to not increase National Insurance and VAT will be welcome by a large segment of the voting population. That said, there has been no comments on changes to Capital Gains Tax and/or Business Asset Disposal Relief, which has long been an additional ‘sweetener’ for those disposing of significant assets.

Deal Makers have long forecasted that politicians, who view the unfair tax advantages advisors, investors and generally the wealthiest in society receive as undemocratic, will seek to introduce less favourable regimes post-election. Whatever the result, Company Owners, Shareholders and their advisors would be wise to prepare for some headwinds, as the political and economic landscape of Britain is set to change.

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