NEWS & VIEWS
With the announcement of a general election comes masses of manifesto pledges and proposals. We have examined the three 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 capital gains tax (CGT) exempt allowance.
- Tax capital gains at the same level as income tax.
- Abolish the lower income tax rate for dividend income which currently sees basic rate tax payers pay 7.5% on dividends above the £2,000 tax-free allowance. For higher rate taxpayers that rises to 32.5%, and 38.1% for additional rate payers.
Liberal Democrats: Abolish the annual CGT exempt allowance.
Income tax
Conservatives: No increase in the rates. The party 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.
Labour: Overhaul the current thresholds.
- Income over £80,000 – 45% rate.
- Income over £125,000 – newly introduced 50%.
Liberal Democrats: Add 1% to all income tax rates, with extra income tax raised ring-fenced for the NHS and social care. This is a vague concept, however, and no details have been released as of yet.
Inheritance tax
Conservatives: No changes to inheritance tax (IHT).
Labour: Scrapping the residence nil rate band. The previous announcement regarding Lifetime IHT is absent from their manifesto.
Liberal Democrats: No changes to IHT.
Corporate-related tax
Conservative:
- Cut corporation tax for high street shops.
- Main 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:
- 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: Increase corporation tax to 20%.
Environment-related tax
Conservative: No changes.
Labour: Windfall tax on oil and gas companies.
Liberal Democrat: Air passenger duty – regular flyers would face charges averaging more than £400 a flight.
Housing-related tax
Conservative: Bring in a stamp duty surcharge on non-UK resident buyers.
Labour:
- 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 Democrat: No changes.
Other taxes
Conservative: Abolish VAT on sanitary products.
Labour: Extend the sugar tax to milk drinks.
Liberal Democrats: 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.
You can read the full manifestoes by following these links: