UK 2019 General Election Manifestos – what are the proposed tax changes?

3rd December 2019

With campaigning in full swing ahead of the first December General Election since 1923, promises surrounding Brexit and the NHS continue to dominate the headlines. However, each manifesto contains a whole host of information that is just as important to consider.  We have put together an overview of the proposals in each manifesto specifically relating to the tax policies.

Polling Station

Labour

In regards to Corporation Tax, Labour are proposing increase from 19% to 21% in April 2020. They then propose further increases in 2021 and 2022, rising to 26% over the next three years.

For those individuals who earn more than £80,000 a year, there will be a slight increase in income tax due, however Labour will freeze National Insurance and income tax rates for those earning a salary below this threshold. Entrepreneur’s relief, when applied to capital gains tax, will be abolished and capital gains tax rates will be aligned with income tax rates. The Labour party are also proposing that dividend tax rates are increased.

They will scrap the bedroom tax, which will see an increase in housing benefit or universal credit for those with spare bedrooms available, but also plan to scrap the marriage allowance which, at present, can reduce a married couple's tax bill by up to £250 a year. Finally, Labour are guaranteeing no increases in VAT.

Conservatives

Despite initially suggesting a decrease in corporation tax to 17%, the Conservative manifesto proposes to maintain the rate at 19%. The Conservatives are also proposing a tax cut for businesses through a reduction of business rates, including a one-year discount for retail businesses, which will be extended to grassroots music venues, small seminars and pubs. R&D tax credits will increase from 12% to 13%, and the definition will be reviewed to bring in cloud computing and data into the eligibility criteria. A rise in Employment Allowance is also proposed, from £3000 to £4000 in 2020/21.

Income tax, National Insurance and VAT are not set to rise and they plan to raise the National Insurance threshold to £9,500, from the current £8632, next year. The overall ambition is to raise this to £12,500 over a 5 year period. The party is also planning to ‘review’ Entrepreneur’s Relief.

On the property front, The Conservatives will look to introduce a Stamp Duty Land Tax surcharge for non-UK resident purchasers and increase the Structural Buildings Allowance from 2% to 3%.

Liberal Democrats

The Liberal Democrats are planning to restore Corporation Tax to 20% and ‘keep the rate stable with a predictable future path’ 

They will also look to abolish the separate Capital Gains Tax-free allowance, and instead tax capital gains and salaries through a single allowance and will review recent proposals to change the IR35 rules. As per the Labour manifesto, the Liberal Democrats are also proposing to scrap the Marriage Tax Allowance.

Finally, the Liberal Democrats are proposing a 1% increase in the headline rate of all levels of income tax as well as an increase to the digital services tax, a tax on the revenues of search engines, social media platforms and online marketplaces, from 2% to 6%.

The Green Party

The Green Party are suggesting the largest increase to Corporation Tax, for the year 2020/21, with a proposed rise to 24% and replace the Income Tax threshold with Universal Basic Income, a ‘sufficient unconditional payment’, paid to all UK residents regardless of employment status.

They also plan to merge Employees National Insurance, Capital Gains Tax, Inheritance Tax, Dividend Tax and Income Tax into a single ‘Consolidated Income Tax’ to close loopholes for tax evasion. It will mean that all income is treated the same way for tax purposes.

If you would like any further assistance with tax planning or navigating any tax changes that may occur following the General Election, contact our tax team on 01926 422292.