Election week and the Tax agendas of the Political Parties
The debate in the run up to the 2017 general election has been less about which party is going to reduce taxes, but more about which party is planning to raise taxes and how, linked to increasing concern about the state of public finances and services.
The main political parties have widely differing views on how to set the tax agenda for the next five years, so what do we know from the promises laid out in the main parties’ manifestos?
- The previous ‘triple lock’ which promised no rise in National Insurance, VAT or Income Tax has been scrapped, although a promise of no increase in the level of VAT remains.
- A commitment to raising the tax free personal allowance to £12,500 by 2020.
- Similarly to raise the threshold for the 40p tax rate to £50,000 by 2020.
- Continued plans to reduce the rate of corporation tax to 17% by 2020.
- A pledge of vigorous action against tax avoidance and evasion.
- Intentions to simplify the tax system.
- Promises to freeze National Insurance and VAT.
- Intention to lower the threshold at which the 45p income tax rate applies to £80,000.
- Also to re-introduce the 50p rate of income tax on earnings over £123,000.
- Plans to increase the rate of corporation tax to 26%.
- Clampdown on tax avoidance and evasion.
- Proposal for public filing of tax returns by large companies and individuals earning over £1m.
- Proposal to raise the employee National Insurance threshold to that of income tax.
- Plans to Increase income tax and dividends tax by 1p.
- Reversal of the planned reduction of corporation tax from 20% to 17%.
- Similarly reversing capital gains tax cuts and reliefs.
- Tough action against corporation tax evasion.
- Reforms to all areas of taxation with a view to making taxes fairer and simpler.
Whichever party wins the coming general election, their manifesto will be the basis for governing, giving voters a clear indication of tax changes that may be implemented by a future government. Whilst tax simplification and a hard line on tax avoidance are common themes among the manifestos of the main parties, a great deal of uncertainty remains on personal and business taxes post the general election.
Article written by Donna McCreadie