General Election Tax Proposals

 In Market Intelligence

With the announcement of a General Election comes masses of manifesto pledges and proposals.  We have examined the 3 main party manifestos to bring you a summary of any proposed changes to taxation.

Capital Gains Tax

CONSERVATIVES

No changes.

LABOUR

Equalise the tax treatment of dividends and capital gains with normal taxable income:

  • Abolish the annual CGT exempt allowance;
  • Tax capital gains at the same level as income tax;

Abolish the lower income tax rate for dividend income1.

LIBERAL DEMOCRATS

  • Abolish the annual CGT exempt allowance.
  1. Currently, basic rate tax payers, who pay 20% income tax, pay 7.5% on dividends above the £2,000 tax-free allowance. Higher rate taxpayers that rises to 32.5%, and 38.1% for additional rate payers.

Income Tax

CONSERVATIVES

No increase in the rates1.

LABOUR

Overhaul the current thresholds:

  • Income over £80,000 – 45% rate2;
  • Income over £125,000 – newly introduced 50%.

LIBERAL DEMOCRATS

  • Add 1% to all income tax rates3.
  1. The Conservatives have abandoned their plans to cut income tax and decided to increase National Insurance threshold to £9,500 next year, with the ambition to raise it further to £12,500.
  2. The 45% rate currently apples to income above £150,000;
  3. The extra income tax raised will be ring-fenced for the NHS and social care, but this is a vague concept and no details have been released yet.

Apart from CGT and income tax, the three parties also plan to change other tax areas:

CONSERVATIVES

Inheritance Tax

No changes

LABOUR

Inheritance Tax

  • Scrapping the residence nil rate band.
  • Previous announcement regarding Lifetime IHT are absent from their manifesto.

LIBERAL DEMOCRATS

Inheritance Tax

No changes

CONSERVATIVES

Corporate related Tax

  • Cut corporation tax for high street shops;
  • Remain corporation tax at 19%, increase employment allowance for small business;
  • Implement digital service tax to aim at forcing multinationals to pay more tax in the UK.

LABOUR

Corporate related Tax

  • Increase corporation tax while keeping it lower than in 2010;
  • Tax multinationals, including tech giants, to pay for the operating costs of the public full-fibre network.

LIBERAL DEMOCRATS

Corporate related Tax

  • Increase corporation tax to 20%.

CONSERVATIVES

Environment related Tax

No changes.

LABOUR

Environment related Tax

  • Windfall tax on oil and gas companies.

LIBERAL DEMOCRATS

Environment related Tax

  • Air passenger duty: regular flyers would face charges averaging more than £400 a flight.

CONSERVATIVES

Housing related Tax

  • Bring in a stamp duty surcharge on non-UK resident buyers.

LABOUR

Housing related Tax

  • Review the option of a land value tax on commercial landlords as an alternative;
  • Scrap the bedroom tax and increasing the Local Housing Allowance;
  • Developers will face new “use it or lose it” taxes to stalled housing development;
  • Give councils new powers to tax properties empty for over a year.

LIBERAL DEMOCRATS

Housing related Tax

No changes.

CONSERVATIVES

Others

  • Abolish VAT on sanitary products.

LABOUR

Others

  • Extend the sugar tax to milk drinks.

LIBERAL DEMOCRATS

Others

No changes.

As an organisation that specialises in taxation software, FSL continually monitor proposed tax reforms, especially changes to CGT or income tax.  If the changes are made law, the calculation engine within CGiX will be upgraded to ensure the new rules are applied.

Recommended Posts