The party manifestos have been published for the general election on 12 December. What do they say on tax?
Firstly, not all the parties proposals have been included in their manifestos. Some have been announced as an aside, or post the manifesto launch.
Secondly, whatever is proposed by the parties, the eventual implementation of any tax changes will depend on the constitution of the next Parliament after the election, and thus the likelihood of being able to actually pass the proposals into legislation.
External links to the three parties’ manifestos are here:
Main tax promises:
- Keep corporation tax at 19%.
- Further reforms to entrepreneurs' relief.
- Increase the employment allowance for small businesses.
- No increases in VAT. Income tax and National Insurance
- Improve R&D (subject to EU state aid rules)
- Increase structures and buildings allowance by 1%.
- Review the business rates system.
- Implement a digital services tax from April 2020 (but in the face of strong US opposition)
- Improvements to the apprenticeship levy.
- Introduce a new levy to encourage recyclable plastics in packaging.
- Review of the IR35 legislation (post manifesto announcement)
- Raise the national insurance threshold to £9,500 in April 2020, with the ultimate ambition being to raise the threshold to £12,500.
- New stamp duty surcharge on non-UK resident buyers
Main tax promises:
- Corporation tax rates to increase to 26% by April 2022.
- Also promise to retain the current 19% rate for companies with turnovers under £300,000, but rising to 21% by April 2021.
- Possible land value tax on commercial landlords as an alternative to business rates.
- Group company profits to be declared, and taxes paid, where economic activity occurs and where valued is created.
- Replace entrepreneurs’ relief with another form of support for entrepreneurs.
- Full review of all existing corporate tax reliefs.
- A new levy on companies paying out high incomes: 2.5% for income paid above £300,000; 5% for income paid above £500,000; and 7.5% for income paid above £1m.
- Phased removal of patent box relief and R&D tax credits for large corporations, but retaining R&D tax relief for SMEs.
- No quarterly reporting for small businesses below the VAT threshold.
- No increases in VAT.
- Review continuation of single director incorporations.
- Extend time limit to 12 years for HM Revenue & Customs to assess corporation tax in cases involving offshore income and gains.
- Further anti-avoidance legislation on international transactions
- New powers for councils to tax properties empty for more than 12 months.
- Ensure country-by-country reporting is fully implemented domestically.
- New windfall tax on oil companies.
- Freeze national insurance and income tax rates for those earning less than £80,000.
- Lower the 45% income tax threshold from £150,000 to £80,0000.
- New tax rate of 50% for incomes over £125,000.
- Tax capital gains at income tax rates (capital gains will continue to fall outside the scope of national insurance).
- Remove the annual capital gains exempt allowance (above a de minimis threshold of £1,000).
- Dividends taxed at income tax rates.
- Scrap non-domicile status
- Increase inheritance tax by abolishing the residence nil rate band.
- Introduce an additional charge at 20% on purchases by offshore companies and trusts of UK residential property, supplementary to existing stamp duties.
- Introduce a new annual levy on second homes that are used as holiday homes, equivalent to 200% of the current council tax bill for the property.
- Retain capital gains tax exemption for primary residences.
- Scrap marriage allowance.
- Impose VAT on private school fees.
- Ensure individuals engaging in ‘profit fragmentation’ schemes pay back the tax owed.
- Extend the sugar tax to milk drinks.
Key tax policies:
- Return corporation tax rate to 20%.
- VAT refunds for colleges.
- Enhancing R&D tax credits to cover the cost of purchasing datasets and cloud computing.
- Sector specific tax reliefs
- Review IR35 for contractors and freelancers
- Enhancements to the digital sales tax.
- Measures to prevent multinationals shifting profits out of the UK.
- Substitute business rates for a new commercial landowner tax based on land value, moving the tax burden from tenants to landowners.
- Permit councils to raise council tax by up to 500% where homes are being bought as second homes, with a stamp duty surcharge on overseas residents purchasing such properties.
- Devolve air passenger duty.
- New health and care tax.
- Extend the sugar tax to include juice and milk-based drinks.
- Progressive tax on international flights
- Stamp duty to reflect energy rating of the property
- Reduced VAT on home insulation.
- Reform vehicle taxation to encourage low emission transport
- Abolish capital gains tax-free allowance and instead tax capital gains and salaries through a single tax-free allowance.
- Increase income tax rates by 1p for basic, higher and additional rate tax bands (excluding Scotland), and ring-fence the funds for investment in mental health.
- End retrospective tax changes, such as the loan charge.
- Scrap the marriage tax allowance.
Here are the links to the manifestos of the Green Party and the Brexit Party.
Contact us for advice
If you would like to discuss how any of these tax proposals may affect you, please contact a member of our tax team, or your usual Bishop Fleming advisor.