Party Policies

Share

The three main parties have all published their manifestos. This has not proved as straightforward as normal because the Labour Party issued three complementary documents:

• A 124 page manifesto, with few explicit tax details;
• An 8 page “Funding Britain’s Future” breakdown of planned increases to current spending and taxes, with matching annual totals of £48.6bn; and
• A 10 page “Tax Transparency and Enforcement Programme”, heavy on anti-avoidance and related measures (e.g. a register of trusts).

However, the Labour paper deluge did not cover funding of its capital expenditure plans, such as its intended renationalisation programme. The implication is that borrowing will be the source of the required funds.

Here is a brief summary of the elements of most interest. Unlike the last set of manifestos in 2015, there are marked differences between the parties. As we have remarked before, it is unwise to assume that a Conservative victory (now at minimum of 25:1 on odds according to Oddschecker.com) will mean none of Labour’s proposals are implemented. Past performance suggests chancellors are happy to ‘borrow’ revenue-raising ideas that have public support, regardless of their original source.

Income Tax
Conservative – “.. increase the personal allowance to £12,500 and the higher rate to £50,000.” No commitment on rates.
“Our system remains too complicated, making it hard for people – especially self-employed people and small businesses – to assess their taxes. We will therefore simplify the tax system.”

Labour – Introduce the 45% tax band at £80,000 and start a new 50% band at £123,000 (where personal allowance tapering ends). Public filing of tax returns for individuals with £1m+ income.

Liberal Democrat – “An immediate 1p rise on the basic, higher and additional rates” to provide £6bn for NHS and social care.
Scrap marriage allowance.

Capital Gains Tax
Conservative – No comment

Labour – Return to rates of 18% and 28%. Tax ‘carried interest’ as income.

Liberal Democrat – Return to rates of 18% and 28% and scrap “extended relief”.

Tax/Universal Credits
Conservative – “…continue the roll-out.”

Labour – “…reform and redesign Universal Credit”.

Liberal Democrat – Reforms to Universal Credit

NICs
Conservative – No comment

Labour – “No increase in personal” NICs.

Liberal Democrat – “In the longer term and as a replacement for the 1p Income Tax rise, commission the development of a dedicated health and care tax on the basis of wide consultation, possibly based on a reform of National Insurance contributions, ”

Wealth Tax
Conservative – No comment

Labour – Listed as an option for funding social care.

Liberal Democrat -“…consider the implementation of Land Value Taxation”

Corporation Tax
Conservative – Stick to 17% by 2020

Labour – Raise mainstream rate to 21% in 2018/19, 24% in 2019/20 and 26% from 2020/21. Reintroduce small profits rate at 20% in 2018/19 and 21% from 2020/21 with (former) £300,000 threshold.

Liberal Democrat – Reverse the cut from 20% to 17%. “…develop a system that benefits the smallest companies while ensuring the biggest multinationals cannot avoid paying sums comparable to nationally based competitors… consult on shifting away from a profits-based tax to one that takes account of a wider range of economic activity indicators, such as sales and turnover.”

VAT
Conservative -“…will not increase the level of Value Added Tax.”

Labour – No increase or extension to “food, children’s clothes, books, newspapers or public transport fares”, but VAT added to private school fees.

Liberal Democrat – No comment

Excessive Pay Levy
Conservative -“…will legislate to make executive pay packages subject to strict annual votes by shareholders and listed companies will have to publish the ratio of executive pay to broader UK workforce pay.”

Labour – Levied on employers where an employee’s pay exceeds £0.33m (on current estimates).

Liberal Democrat – “Require binding and public votes of board members on executive pay policies.”

Tax Avoidance
Conservative -“…will legislate for tougher regulation of tax advisory firms..[and] take a more proactive approach to transparency and misuse of trusts”

Labour – A raft of measures aimed at raising £6.5bn annually.

Liberal Democrat – Introduce “…a General Anti-Avoidance Rule, setting a target for HM Revenue and Customs to reduce the tax gap”

Inheritance Tax
Conservative – No comment

Labour – Scrap residence nil rate band

Liberal Democrat – Scrap residence nil rate band

University Fees
Conservative – No comment

Labour – “…will reintroduce maintenance grants for university students, and … will abolish university tuition fees” at an annual cost of £11.2bn

Liberal Democrat – “Reinstate maintenance grants for the poorest students….[and] establish a review of higher education finance…”

State Pension

Conservative -“…will keep….the triple lock until 2020, …[then] introduce a new Double Lock”, ie removing 2.5% floor.
“…ensure that the state pension age reflects increases in life expectancy, while protecting each generation fairly.”
“…will means test Winter Fuel Payments, focusing assistance on the least well-off pensioners”, but leave other benefits untouched “for the duration of this parliament”.

Labour – Keep triple lock, Winter Fuel Payments and free bus passes for all pensioners. “…will commission a new review of the pension age” for increases beyond 2020 (ie beyond age 66).

Liberal Democrat – Keep triple lock. “Withdraw eligibility for the Winter Fuel Payment from pensioners who pay tax at the higher rate (40%)…[but] retain the free bus pass for all pensioners.”

Private Pensions

Conservative – “…give pension schemes and the Pensions Regulator the right to scrutinise, clear with conditions or in extreme cases stop mergers, takeovers or large financial commitments that threaten the solvency of the scheme.” No comment on tax relief.

Labour – “…will end rip-off hidden fees and charges”. Amend takeover code to protect pensions. No comment on tax relief.

Liberal Democrat – “Establish a review to consider the case for, and practical implications of, introducing a single rate of tax relief for pensions, which would be set more generously than the current 20% basic rate relief.”

Social Care in England
Conservative – “…align the future basis for means-testing for domiciliary care with that for residential care, so that …the value of the family home will be taken into account along with other assets and income, whether care is provided at home, or in a residential or nursing care home.”
“…extend the current freedom to defer payments for residential care to those receiving care at home.”
“…introduce a single capital floor, set at £100,000”, but no Dilnot-type cap on total fees payable.

Labour – “place a maximum limit on lifetime personal contributions to care costs, raise the asset threshold below which people are entitled to state support, and provide free end of life care…will seek consensus on a cross-party basis about how it should be funded, with options including wealth taxes, an employer care contribution or a new social care levy.”

Liberal Democrat – “Finish the job of implementing a cap on the cost of social care…”

Minimum Wage
Conservative – “… increase the National Living Wage to 60% of median earnings by 2020 and then by the rate of median earnings,”

Labour – “Raise the Minimum Wage to the level of the Living Wage (expected to be at least £10 per hour by 2020) – for all workers aged 18 or over”

Liberal Democrat – “Establish an independent review to consult on how to set a genuine living wage across all sectors.”

Share

Other News

Tax Year End Planning Checklist For Individuals – 2023/24 Tax Year

As tax year end approaches, there is still time to make use of your available reliefs and allowances.

This tax year end planning checklist covers the main planning opportunities available to UK resident individuals and will hopefully help to inspire action to reduce tax for the 2023/24 tax year and to plan ahead for 2024/25.

Higher Rate Taxpaying Is A Growing Club

As tax rate band thresholds are changing, understanding the impact on high rate taxpayers and the economy is crucial.

5 Top Tips To Boost Your Pension Savings

It was recently revealed in the media that the amount we need to enjoy a ‘moderate’ retirement has increased by £8,000 per annum, a 38% increase, in just one year.