Following our promise to keep you as up-to-date as possible with all things financial, we have obtained an at-a-glance guide to the intentions of the main political parties regarding taxation.The Certified Public Accountants Association has sifted through all 592 pages of the manifestosbelonging to the Conservatives, Labour, Liberal Democrats, Green Party, UKIP, Scottish National Party and Plaid Cymru. We hope the brief outlines below will clarify the parties’ current thoughts for you.
The Conservative Party:
- No increases in VAT, National Insurance contributions or Income Tax.
- Increase to the tax-free Personal Allowance to £12,500.
- The higher rate Income Tax threshold will rise to £50,000.
- Married couples will be able to transfer £1,060 of their tax-free income to their husband or wife, where the highest earner is a basic rate taxpayer.
- People who work for 30 hours a week on the increased National Minimum Wage will no longer pay any Income Tax at all – a new law will be passed so that the Personal Allowance automatically rises in line with the National Minimum Wage.
- Crack down on tax evasion and aggressive tax avoidance.
- Increase the annual tax charges paid by those with non-domiciled status.
- Push for all countries to sign up to the Extractive Industries Transparency Initiative; review the implementation of the new international country-by-country tax reporting rules and consider the case for making this information publicly available on a multilateral basis.
- Ensure developing countries have full access to global automatic tax information exchange systems and continue to build the capacity of tax authorities in developing countries.
- Establish the OTS on a permanent basis and expand its role and capacity.
- Reduce the tax relief on pension contributions for people earning more than £150,000.
- Increase the effective Inheritance Tax threshold for married couples and civil partners to £1 million, with a new transferable main residence allowance of £175,000 per person.
The Labour Party:
- No increase to the basic or higher rates of Income Tax, National Insurance or VAT.
- Introduce a lower 10p starting rate of tax.
- Re-introduce the 50% top rate of income tax for people earning over £150,000.
- Cut and freeze business rates to maintain competitive corporate tax rates.
- Extend the sharing of tax information to developing countries, increase DFID’s help to governments to collect more of their own taxes and tackle corruption.
- Work with international companies to ensure they pay taxes where they are due.
- Introduce a “mansion tax” on houses worth over £2m. The threshold for the tax will rise in line with house prices and those on lower incomes will have a right to defer the charge until the property changes hands.
- Allow Local Authorities to introduce a higher council tax on long term empty properties.
- Provide tax rebates to firms becoming Living Wage employers.
- Abolish non-dom status so that all those who make the UK their home pay tax in the same way as the rest of the inhabitants.
- Carry out an immediate review into the culture and practices of HMRC so that everyone follows the same rules and we increase the rigour of the tax system.
- Give extra powers to Scotland over tax.
- Raise the Personal Allowance to at least £12,500 and bring forward the planned increase to an £11,000 allowance to April 2016.
- Consider raising the employee National Insurance threshold to the Income Tax threshold.
- Set a target for HM Revenue and Customs to reduce the tax gap and continuing to invest in staff to enable them to meet it.
- Introduce a general anti-avoidance rule which would outlaw contrived structures designed purely or largely to avoid tax.
- Implement the planned new offence of corporate failure to prevent economic crime, including tax evasion, with penalties for directors up to and including custodial sentences.
- Levy penalties on firms proven to facilitate tax evasion, equivalent to the amount of tax evaded by their clients.
- Bank of England’s Financial Policy Committee to consider the approach to paying tax taken by banks for themselves, their employees and for their customers, as part of their assessment of the risks posed by the sector, supported by an annual report by HMRC.
- Reform business tax to ensure it stays competitive and adjust the tax system away from subsidy of high leverage debt.
- Enable Local Authorities to levy up to 200% Council Tax on second homes.
- Improve tax transparency internationally, including in low-income countries by extending country-by-country reporting from banks and extractive industries to all UK listed companies.
- Lead international action to ensure global companies pay fair taxes in the developing countries in which they operate, including tightening anti-tax haven rules and requiring large companies to publish their tax payments and profits for each country in which they operate.
- Reform Capital Gains Tax and Dividend Tax relief, refocusing Entrepreneurs’ Relief and a supplementary Corporation Tax for the banking sector.
- Increase charges to non-doms, raising £130 million. Restrict access to non-domiciled status, increasing the charges paid to adopt this status and ending the ability to inherit it.
- Raise up to £1.5bn from a tax on homes worth over £2 million by introducing a UK-wide High Value Property Levy (“mansion tax”) on residential properties worth over £2 million.
- Raise the additional (top) rate of income tax to 60%.
- Introduce a wealth tax of 2% a year on the top 1% whose wealth exceeds £3 million.
- Steadily increase staff in HMRC by 15,000 per annum over the Parliament, in particular reopening local offices.
- Introduce an urgent programme of legislation, starting with a Tax Dodging Bill designed to reduce the tax gap and establish a general anti-avoidance principle.
- Abolish the rule that allows non-domiciled residents not to pay tax on foreign income.
- Consider making the £2 billion industry of designing, promoting and selling tax avoidance schemes illegal.
- Introduce a financial transaction tax (a “Robin Hood” tax) of 0.1% on transactions in bonds and equities and 0.01% on derivatives, replacing the existing stamp duty on share transactions.
- Make preparations to replace both Council Tax and the Uniform Business Rate by a system of Land Value Tax, where the level of taxation depends on the rental value of the land concerned.
- Reform Council Tax by asking people in bigger homes to pay more and those in smaller ones and adding bands at the top for homes worth more than around £2 million and £4.5 million.
- Abolish the employees’ National Insurance upper threshold.
- Not allow corporation tax relief on any part of a salary that exceeds the maximum allowed by the 10:1 ratio in that company, to make it harder for companies to pay excessive salaries.
- Increase corporation tax from 20% to 30%, yielding around £12 billion a year in a full year. Small firms would remain on 20%.
- Abolish the capital gains tax personal allowance, raising around £3.8 billion a year.
- Fundamentally reform inheritance tax and turn it into an accessions tax.
- Counter avoidance by abolishing the seven-year rule and making all gifts by living donors subject to a similar accessions tax.
- Begin a major ecological shift in the taxation of companies by removing disincentives to employ people.
- Increase personal allowance to £13,000.
- Scrap inheritance tax.
- Raise the threshold for paying 40 per cent income tax to £55,000 and introduce a new intermediate tax rate of 30 per cent on incomes ranging between £43,500 and £55,000.
- The longer term aspiration of a UKIP government will be to create an income tax structure of a basic rate of 20 per cent, an intermediate rate of 30 per cent, and a top rate of 40 per cent.
- Increase the transferable tax allowance for married couples and civil partners to £1,500.
- Set up a Treasury Commission to monitor the effectiveness of the new Diverted Profits Tax and bring in any further measures necessary to prevent large multinational corporations using aggressive tax avoidance schemes.
- Charge those whose homes are empty for more than two years 50 per cent more than the applicable rate of council tax.
- If a business has only one property and the rateable value is less than £50,000, the business will get 20 per cent rate relief.
- Offer tax breaks to smaller breweries to encourage micro-breweries.
Scottish National Party:
- Support targeted reductions to employer’s National Insurance contributions to support job creation.
- Support increases in the personal tax allowance but will also back an increase in the Work Allowance.
- Back proposals to return the top rate of income tax in the UK to 50p. Move forward cautiously with plans to increase the higher rate threshold to £50,000, ensuring first that tax revenues are sufficiently buoyant.
- Introduce a specific tax on properties valued at over £2 million, increases to the bank levy, a banker’s bonus tax and a review of the pension tax relief available to the wealthiest.
- Back measures to tackle tax avoidance, including early legislation to address tax dodging and an increase in staff resources at HMRC.
- Strengthen anti avoidance law across the UK to ensure it is as strong as new Scottish legislation.
- Support a review of controlled foreign companies’ exemptions and favour a rolling review of tax reliefs as part of an ongoing programme of simplification of the tax system.
- Support calls for a global fair tax summit to agree international measures to tackle tax abuses.
- Use targeted changes in business tax allowances to encourage higher levels of investment in capital or Research & Development, and encourage the growth of SMEs.
- Re-introduce 50p income tax rate for those earning over £150,000.
- Raise the personal allowance threshold at which National Insurance Contributions are paid, with the aim of making this the same threshold for paying income tax.
- Provide tax relief for self-employed workers undertaking training and investigate the creation of a Welsh based training agency, specialising in training the self-employed.
- Increase the Upper Earnings Limit on National Insurance Contributions to £100,000 per year.
- End pensions relief subsidy for higher rate tax payers.
- Double the bankers’ levy.
- Strengthen tax anti avoidance legislation.
- Introduce a Financial Transaction Tax on financial transactions and legislation similar to the Communities Reinvestment Act in the USA to ensure that appropriate credit is available to individuals and businesses, wherever they are based.
- HMRC need more staff to crack down on corporate tax avoidance and income tax evasion, and close this ‘tax gap’. Plaid Cymru would reverse the 25% cut in staff.
- Transfer control over Corporation Tax to Wales.
- Insist that Wales should have the same taxation powers as Scotland.
If you are worried about the implications of any of the above please call Vincent & Co on 01803 500 500.
If you wish to read the complete manifestos please click on the links below: