What could the election bring? A payroll view of the manifestos  

At The Chartered Institute of Payroll Professionals (CIPP), we have reviewed the three main party manifestos to understand what their stances are when it comes to issues that will affect our members and the payroll industry as a whole. 

Tax

Income tax rates would likely be held by a Conservative or Labour government, whereas the Liberal Democrats have proposed a cut to income tax, with a view that they would raise the tax-free allowance. Labour is keen to review the current tax system to make it “fairer”, through policies such as abolishing ‘non-dom’ status. The Liberal Democrats have proposed a tax status review for employees, freelancers and dependent contractors, to improve fair and comparable treatment for them as workers. 

National Insurance 

The Conservatives remain committed to reducing National Insurance (NI) in their manifesto, proposing a further 2p off employee contributions, and to reduce overall NI to 6% by April 2027. Labour have committed to not raise the rates of NI, while the Liberal Democrats are playing their cards close to the chest, with the only mention of NI in reference to a review of NI status for employees, freelancers and dependent contractors. 

Pensions

The Conservatives have put forward the ‘Triple Lock Plus’, which would see the State Pension and tax-free allowance for pensioners rise with the highest of either inflation, earnings, or 2.5%, with additional protections being added in future.

Labour and the Liberal Democrats both support the Triple Lock (with Liberal Democrats backing the Conservatives approach to pensions rising in line).

Zero Hours, Self Employment and Contractors 

The Liberal Democrats have focused on how to improve pay and tax for those on zero hours contracts and the self-employed. They propose a review to off-payroll working IR35, offering those on zero hours contracts the option to request a fixed contract after 12 months of work, and establishing a new ‘dependent contractor’ status, which would sit between employment and self-employment, with basic rights protections and entitlements. 

Labour proposes a full ban on zero hours contracts, and ‘fire and rehire’ approaches, to give more protection to workers. There is no mention of these issues in the Conservative manifesto.

Statutory Payments and Parental Leave 

The Conservatives are keen on an overhaul of fit notes, to encourage more people back into work. Labour and the Liberal Democrats both advocate for a reform of Statutory Sick Pay[1] , and Labour propose that the rights should activate from day one of employment. 

The Liberal Democrats outline a more detailed policy, with day one rights, making Sick Pay available to those earning less than £123 a week, aligning the rate of Sick Pay with National Insurance, and supporting small employers with the costs of Sick Pay.

Similarly, Labour and the Liberal Democrats support day one rights for parental leave, with the Liberal Democrats keen to raise Parental Leave pay and improve access to it for fathers, the self-employed, and those caring for neonatal babies. Parental leave is not addressed in the Conservative manifesto.

Minimum Wage 

Labour proposes a removal of age bands for minimum wage so all those of working age are paid the same, although there is no mention of when or how they would raise the minimum wage. The Conservatives pledge to maintain the current National Living Wage, while the Liberal Democrats have taken a more review-based approach. They propose reviews to apprentice wages, zero-hour worker wages, and a review of the National Living Wage to more genuinely reflect the needs of workers. 

For more detail, please see the Chartered Institute of Payroll Professionals full Payroll Manifesto.

Look out for the CIPP’s post-election commentary with CEO Jason Davenport in Reward Strategy in the week after the election.