The 2017 general election, called just a matter of weeks ago by Conservative party leader Teresa May, is just days away. The polls are suggesting that the initial Tories lead has diminished as the gap closes, making the result unpredictable. If there isn’t a clear victory then a hung parliament will certainly require compromise and trade-offs regarding the differing opinions of each party. Here we look at the main tax related points from each manifesto.
Income Tax
- Conservatives – continue with their promise to increase the higher rate tax threshold to £50,000 by 2020, meaning people that earn middle-range salaries can save on tax. They also want to increase the personal allowance by another £1,000 per year by 2020.
- Labour – would plan a new income tax band at £80,000, however it hasn’t been confirmed the related tax rate at this stage
- Liberal Democrats – plan to help fund the NHS and social care services by a rise in each income tax rate by 1%
- SNP – want to see top rate tax increase to 50%, up 5% from its current level. This would apply to income over £150,000. Also, the SNP would tax banker’s bonuses with a new tax.
- UKIP – plan to increase the higher rate tax threshold to £55,000, meaning less tax for those with middle-level earnings. Also, they would reverse the current tapering of the personal allowance for people earning over £100,000.
Corporation Tax (CT)
- Labour – would plan to revert the CT cuts made in recent years, with a main rate of 26%, to be phased-in over the next decade. A 21% rate would be available for small companies though.
- Conservatives – would continue as planned to reduce CT even further, to 17% by 2020.
- SNP – are against further CT cuts, however have not directly mentioned a rise either.
- Green Party – plan to increase CT for large companies, to 28%. Specific details about what classifies as a large company, or the rate for small companies is not yet clear.
- Lib Dems – would increase CT again to 20%
- Plaid Cymru – want to set their own rate of CT.
Inheritance Tax
- Lib Dems – would reverse the increase in the IHT threshold, which isn’t clear, but likely relates to the Main Residence nil rate band.
- Labour – also talk about reversing the IHT threshold increase
- UKIP – would opt to virtually eradicate IHT by increasing the nil rate band to £500,000
- Green Party – would completely reform IHT, with the tax rate being dependent on the earnings or wealth of the recipient, not on the value of the estate.
VAT
- SNP – propose an increase in VAT and insurance premium tax (IPT), although they would reduce VAT for the hospitality and tourism sectors.
- UKIP – also propose increases to VAT and IPT. UKIP also plan to remove VAT from products and services such as fuel for domestic use, energy bills and hot take-away food. This would be following Brexit where the UK could set it’s own VAT rates, or give VAT a complete reform.
- Plaid Cymru – would also reduce VAT for hospitality businesses
- Labour – plan to add VAT to private school fees
- Conservatives – have pledged to not raise the level of VAT, however specific details are not mentioned.
National Insurance (NI)
- Conservatives – would incentivise businesses to recruit ex-service personnel by offering a one-year employer’s NI holiday
- Labour – promises no increase to employees NI but there is no mention about employers
- SNP – are of the same view as Labour
- Green – would force the wealthy to pay more NI by removing the upper limit on employers NI.
Making Tax Digital (MTD)
- Labour – would exclude small businesses from the Making Tax Digital initiative in terms of the quarterly reporting. However, there is no mention how small the business needs to be to qualify for exemption.
- SNP – will consider exemptions for unincorporated businesses, or businesses that are not VAT registered. Quarterly reporting for everyone else would be phased-in over a five-year period.
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