As always, the manifestos recently published by the political parties in advance of the forthcoming general election contain many pledges designed to attract voters. In this article, we summarise the main policies on personal taxes, national insurance, other social security policies, pensions, and minimum wages for individuals.
The Conservative party pledges not to raise the rates of income tax for the duration of the next Parliament.
Labour proposes taxing income of over £80,000 a year at the 45% additional rate, and income of over £125,000 a year at a “new super-rich rate” - expected to be 50%. It would also scrap the married person’s allowance and tax dividends at marginal income tax rates.
The Liberal Democrats propose raising income tax rates (except in Scotland) by 1%. They also propose to end retrospective tax changes like the loan charge, and to review recent proposals to change the IR35 rules. They would also scrap the marriage tax allowance.
Capital gains tax
The Conservatives plan to review and reform Entrepreneurs’ Relief. The Labour party would scrap Entrepreneurs’ Relief and consult on a “better form of support for entrepreneurs.
Labour also proposes to tax capital gains at marginal income tax rates, with a de minimis threshold of £1,000. It would introduce a ‘rate-of-return’ allowance set at contemporary 10-year bond rates to allow gains below this rate to be earned tax-free. Similarly, the Liberal Democrats propose to abolish the CGT annual allowance and instead, tax capital gains and salaries through a single allowance at income tax rates.
Labour would reverse Conservative inheritance tax cuts by removing the main residence nil rate band. The Brexit Party would simply abolish IHT.
The Conservatives propose to introduce a 3% surcharge on Stamp Duty Land Tax for non-UK resident buyers of UK residential property. The Labour party would create a new Offshore Company Property Levy at 20% on purchases of UK residential property by offshore companies and trusts located in tax havens (it would apply in addition to SDLT).
Labour would introduce a new annual levy on second homes that are used as holiday homes, equivalent to 200% of the current council tax bill for the property. The Liberal Democrats would set a penal rate of 500% of council tax to be levied “where homes are being deliberately bought as investment properties and left empty for long periods with a stamp duty surcharge on overseas residents purchasing such properties.
National Insurance for employees
The Conservatives propose to cut NIC for individuals by raising the starting threshold to £9,500 a year from April 2020, and eventually to £12,500, while freezing the rates of NIC. Labour’s policy is a freeze on rates, at least for those earning less than £80,000 a year. The Liberal Democrats would review the tax and National Insurance status of employees, dependent contractors and freelancers to ensure fair and comparable treatment.
Read more on minimum wage and other employment related proposals.
Past political controversy over pension tax relief has perhaps influenced politicians not to make specific commitments on the topic subject. However, Labour has pledged to review the tax and pension changes implemented by the Conservative Government, and the Liberals would also review the rules and the impact they are having on senior NHS clinicians (the Government has recently announced temporary measures to address this issue).
The Conservatives, Labour and the Liberal Democrats are pledged to maintain the state pension triple lock. Labour would freeze the state pension age at 66 and Labour and the Liberal Democrats would compensate women born in the 1950s for losses suffered through past changes to the state pension age. The Brexit Party would also review the position of those affected.
Other social security policies
The Conservatives propose that people coming into the country from the EU will only be able to access unemployment, housing, and child benefit after five years, and would require new arrivals to contribute to the funding of the NHS. They state that nobody needing care should be forced to sell their home to pay for it, although have not put forward specific funding proposals. Labour proposes to spend an additional £10.8bn a year to introduce free personal care for over 65s.
Labour pledges to scrap Universal Credit and replace it with an alternative system. The Liberal Democrats would reform Universal Credit to be more supportive of the self-employed. They would also radically overhaul the Bereavement Allowance, so that widows and widowers receive more support, and extend the payments to unmarried couples when a parent dies. The Brexit Party would also reform Universal credit.
The Labour party is committed to a pilot scheme for a Universal basic income. The Green party would also introduce a universal basic income scheme.
The Conservatives propose to double the maximum prison term to 14 years for individuals convicted of the most serious types of tax fraud. They also pledge to create a new HMRC Anti-tax Evasion Unit and introduce a new package of anti-evasion measures. The Liberal party is promising to simplify the tax system to remove opportunities for tax avoidance.
The Labour party promises to launch the “biggest ever crackdown on tax avoidance and evasion”, and to “reform the inefficient system of tax reliefs”. It would replace the current General Anti-Abuse Rule with a new “GAAR” described as a General Anti-Avoidance Rule. It would abolish non-dom status for tax purposes, create a public register for trusts and require public filing of tax returns for wealthy individuals (defined as those earning over £1m a year).
Election 2019 – policies affecting employers
Election 2019 – policies affecting business taxes