With voting day fast approaching, we have broken down the key areas of the 3 main parties’ tax proposals.
Income Tax & National Insurance
Conservatives
The Conservatives have pledged not to increase the rates on income tax or National Insurance Contributions (NICs), other than a proposed increase in the NIC threshold to £9,500 (currently £8,632) with a pledge to increase this to £12,500 to be in line with the income tax personal allowance.
Labour
Labour are proposing to introduce a 45% tax rate for individuals earning over £80,000 and a 50% tax rate for those earning over £125,000.
In addition, Labour have pledged a removal of dividend tax rates (currently 7.5%, 32.5% and 38.1% for basic, higher and additional rate taxpayers) and bring the taxation of dividends in line with other income.
Liberal Democrats
The Liberal Democrats have proposed a 1% increase in income tax rates (to 21%, 41% and 46% for basic, higher and additional rate taxpayers) to help fund the NHS.
Capital Gains Tax
Conservatives
Again, not much will change with the Conservatives, although they have pledged to review and reform Entrepreneur’s Relief, which currently allows the sale of businesses and business assets to be taxed at 10% if a number of conditions are met.
Labour
Labour have pledged to align Capital Gains Tax (CGT) rates with income tax rates (i.e. 20%, 40%, 45% and 50%) instead of the current 10%/20% (or 18%/28% on residential property) as well as abolish the CGT annual exemption.
Labour are also proposing to abolish Entrepreneur’s Relief.
Liberal Democrats
The Liberal Democrats are also proposing to remove the CGT Annual Exemption.
Businesses
Conservatives
The Conservatives are proposing to:
Retain Corporation tax at 19%
Increase the Employment Allowance (the reduction in employer’s NIC) from £3,000 to £4,000.
Increase in Structures and Buildings Allowance will be raised from 2% to 3%.
Increase in R&D Tax Credits from 12% to 13%.
Labour
Labour are proposing to increase the Corporation Tax rate to 26% (main rate) and 21% (small profits rate).
Labour are also proposing to abolish R&D tax credits and Patent Box for large corporations.
Liberal Democrats
The Liberal Democrats are proposing to increase Corporation Tax to 20%, expand the scope of the R&D tax credit to be allowed on more items of expenditure and to expand the Apprenticeship Levy.
Other tax areas
Conservatives
The Conservatives are planning to:
Introduce a Stamp Duty Land Tax (SDLT) surcharge of 3% for non-residents buying UK property.
Labour
Labour are planning to:
Reverse ‘cuts to Inheritance Tax’
Introduce 20% VAT on private school fees
Introduce a 0.5% Stamp Duty levy on foreign currency transactions over £1,000
Introduce a Council Tax levy of 200% on second homes used as holiday homes.
Liberal Democrats
The Liberal Democrats are planning to:
Introduce a SDLT surcharge on UK non-residents who purchase second homes in the UK.
Increase the Digital Services Tax from 2% to 6%.
Increase Council Tax on second homes by up to 500%.
Contact Us
Please contact us to find out how the above applies in your circumstances and how you can reduce your tax liabilities and maximise your tax efficiency.
Please note that the above is for general information only and does not constitute financial or tax advice. You should not rely on this information to make or refrain from making any decisions. You should always obtain independent professional advice in respect of your own situation.
