When is the next general election? What it means for small business

A general election can be transformative for UK businesses. It’s a time when every political party lays out their plans for the country, and this includes businesses of all sizes. With a general election likely in 2024, business owners should understand what the leading parties could do for them.

So, when is the next general election? And what would a change in government mean for your business? Read on to find out.

When is the next general election?

The next general election must happen by January 2025 at the latest.

The last general election was 12 December 2019, which means the current government will be dissolved on 17 December 2024. A general election needs to be held 25 working days after the government is dissolved.

But that doesn’t mean it won’t happen sooner – the government has the power to call a general election at any time. For example, in 2017, former Prime Minister Theresa May called a snap election two years before the next scheduled one.

And there’s reason to believe both spring and autumn 2024 are options for a general election. Some senior Conservative MPs have allegedly urged the Prime Minister, Rishi Sunak, to consider a spring election because it’s an “economic sweet spot”. The idea being that the current economic pressures like inflation and rising cost of living may have eased by then.

However, The Times reported that the prime minister's preferred date would be 31 October 2024. The reasoning behind an autumn election is similar to a spring one – to allow as much time for the economy to recover before going to the polls.

What are the polls saying?

YouGov regularly surveys the general public to understand voting intention. Their latest polls from November 2023 reveal how the votes could be shared:

• Conservatives – 23 per cent
• Labour – 47 per cent
• Liberal Democrats – 10 per cent

While polls aren’t always the most accurate tool for predictions, they can give a good sense of how well supported parties are.

As the Conservatives and Labour are likely to share the majority of the vote, we’ll explain what the two parties could mean for UK small businesses if they were to win the election.

And while manifestos outlining each political party's policies haven't been released yet, we've taken a look at some of the messaging we've seen so far.

What might we see from the Conservatives?

As the current government is Conservative, looking at their current approach is a good place to start. In their latest Spring Budget, we got a sense of the government's plan for businesses.

From April 2023, these changes came in to effect:

• corporation tax increased from 19 per cent to 25 per cent
• additional income tax threshold decreased from £150,000 to £125,140, which means any earnings over £125,140 are taxed at 45 per cent
• the personal allowance of £12,570 was frozen until 2028
• tax-free dividends were reduced from £2,000 to £1,000 (falling to £500 in 2025)
• the tax-free allowance on capital gains tax was reduced from £12,300 to £6,000

It's likely that the government will stick to these plans, and that there won’t be any significant tax relief for businesses if they were re-elected. Especially due to the economic pressure being caused by the cost of living crisis and sky-high inflation.

Our Autumn Statement predictions article explains what is and isn’t likely to happen in the next economic update. This includes potential tweaks to business rates, energy bill support, and taxes.

But investment seems to be a big part of the Conservatives' plan for supporting businesses. Several government initiatives focus on unlocking the potential of the UK workforce.

Investment to drive business growth

Investment zones are one of the government’s main strategies. Local leaders are being given the tools to drive business growth in their areas.

Each zone receives £80 million of funding to use for skills, infrastructure, tax reliefs, and business rates retention.

Eight locations in England will be eligible to host a UK investment zone:

• West Midlands
• Greater Manchester
• North East
• South Yorkshire
• West Yorkshire
• East Midlands
• Teeside
• Liverpool

Support with childcare costs

Expanding tax-free childcare is another way the current government aims to support business owners and the self-employed. Reducing the cost of childcare so business owners don’t have to choose between growing their business and their family could remain a priority if the Conservatives are re-elected.

Our guide to tax-free childcare breaks down how to apply, eligibility, and how much you could receive as a small business owner or self-employed parent.

Funding for tech startups

Turning the UK into “the world’s next Silicon Valley and a science superpower” is the ambition of Chancellor Jermy Hunt, with funding being put into tech startups.

The plan is to inject £75 billion into startups from pension funds. Nine major pension funds have agreed to invest at least five per cent of their assets into UK startups.

This will “unlock capital from the private sector delivering growth not by subsidy, but by increasing support for entrepreneurs and investors who take risks to create long-term value”, Hunt said.

Tackling late payment

As part of the Cash Flow and Prompt Payment review, the Conservatives want to improve the reporting around late payments as well as giving more power to the Small Business Commissioner.

Secretary of State for Business and Trade Kemi Badenoch said: “I know that late payments are a massive barrier to growth and I am determined to fix that.

“The measures we’re announcing will take a big step towards making sure SMEs get their payments on time, helping firms to grow and prosper.”

Data from our SME Insights Report shows the scale of the problem for small business owners with 54 per cent being owed up to £5,000 in late payments.

More lenient energy efficiency targets

In a surprise move, Prime Minister Rishi Sunak announced a set of changes to the UK’s net-zero targets. With the phasing out of new petrol and diesel vehicles being delayed, minimum energy efficiency rules for rental properties being scrapped, and slowing the transition away from gas boilers – the government has made its approach clear.

It says it will cost households and businesses too much to make these efficiency upgrades in the current financial climate. And the Conservatives want to give people more time for this transition rather than introducing schemes to support them doing it sooner.

It's also important to note the Conservatives’ ‘plan for drivers’ which lays out how they’ll improve systems like 20mph zones, emissions charges, and low traffic neighbourhoods. They’ve shown they want to be pro-motorist as a party, which could benefit business owners that drive for work.

What might Labour do for small businesses?

“Making Britain the best place to start and grow a business” is Labour’s ambition. As the Labour Party doesn't have an official manifesto yet, it’s important to understand that these are goals, rather than definite plans.

Labour has released their strategy for revitalising the high street, which would have a broader impact on all businesses. This helps to give small business owners a sense of what Labour see as a priority.

Stamping out late payments

We know that late payments are a consistent issue for small businesses, so it’s no surprise that both Labour and the Conservatives have made solving the issue a priority. Labour plans to “introduce tough new laws to stamp out late payments and make sure more money gets to high street firms.”

To reduce the amount of late payments, Labour say they would make “big businesses report on their company's payment practices in their annual reports” in an attempt to make larger companies more accountable.

Cuts to business rates?

Business rates affect any small business that has a commercial property. Labour is looking to cut business rates for SMEs by raising the small business rates relief threshold.

They say this will all be funded by enforcing higher digital services tax on “tech giants”, estimating that this policy change could save the average pub or restaurant £2,600.

Reduce energy bills

Our data shows 43 per cent of SMEs are spending between 21 and 60 per cent more on energy than in 2022 and Labour aims to support them in becoming more energy efficient.

Labour plan to introduce a voucher scheme that would make getting an electric vehicle or installing heat pumps and insulation more affordable for businesses. They say £700 million can be raised from a windfall tax on oil and gas companies, which will then fund these vouchers for small businesses.

“Get Britain building again”

One of the main takeaways from the Labour party conference is their plan to build 1.5 million homes to help people get on the property ladder.

After a slowdown in new construction jobs, this is good news for the industry as it could spark new projects across the country. And the Federation of Master Builders (FMB) has emphasised the importance of using the talent of UK small businesses.

Brian Berry, Chief Executive of the FMB, said: “The announcement on new towns is a good idea to promote regional growth and deliver new homes, but it’s essential that local builders are part of this process. By bringing SMEs on board with new town development this will ensure high quality and diverse housing is delivered, while also creating wider benefits, like vocational skills opportunities.”

Come back to the Knowledge centre where we’ll be covering all the latest developments as we get closer to a general election. We’ll provide updates when the political parties release their manifestos and breakdown everything you need to know.

More useful guides for small business owners

• Best business bank account
• How to do a VAT return
• What can I claim as expenses on a tax return?
• How much is business insurance?