With the UK’s political parties preparing for a 12 December election battle – now would be a good time to take stock of what this might mean for tax policy, and what the proposed changes could mean for our clients. None of the below can be guaranteed, as we are living in uncertain times… we will have to wait and see how this plays out during the election campaign.
Conservative Party under Boris Johnson
• Boris Johnson’s headline tax policy during the Conservative leadership campaign was to increase the income tax higher rate threshold to £80,000.
• Increase the stamp duty land tax (SDLT) threshold to £500,000 (from £125,000) and slash the top rate perhaps to 7% (from 12%).
• The Chancellor, Sajid Javid, indicated that he was considering scrapping inheritance tax (IHT) completely and previously gave his support to scrapping the 45% additional rate of income tax for those earning over £150,000.
• Boris Johnson hinted that the Conservatives may reduce the corporation tax rate below the 17% rate earmarked for April 2020.
• The party has been silent on the topic of non-domiciliaries (non-doms).
Labour Party under Jeremy Corbyn
• Much of the Labour party’s thinking on taxation was introduced in their 2017 election manifesto and their responses to the 2018 Budget.
• Labour’s proposed amendment to the 2018 Budget backed reducing the income tax additional rate (45%) threshold to £80,000 (from £150,000), as well as introducing a 50% income tax rate on those earning over £125,000.
• Along with the Liberal Democrats, Labour has indicated that it may overhaul IHT and replace it with a ‘lifetime gift tax’ levied on the recipient for gifts over £125,000.
• Labour has indicated that the current Capital Gains Tax (CGT) and IHT regimes favour the wealthy and there are rumours that certain reliefs, such as entrepreneurs’ relief, business property relief and agricultural property relief may be restricted. It has also suggested that corporation tax rates and CGT rates should be increased.
• Labour is less accepting of non-doms and non-residents owning UK property and has proposed that SDLT rates should be increased for non-doms, non-residents and corporates. It may also be considering expanding the scope of the Annual Tax on Enveloped Dwellings (ATED) as well as introducing an ‘offshore company property levy’ for properties held by vehicles in ‘secrecy’ jurisdictions.
• Labour has also announced that it intends to abolish the tax regime for non-doms at its first Budget. [1]
Kieron Clement-Smith of Mondaq has stated – “Though nobody can be sure of the outcome of the General Election at this stage, a number of Labour’s policies are likely to be popular with parts of the electorate. However, Labour’s tax policies may be a cause for concern for higher earners, landlords and non-doms in particular, especially given the complex changes to the tax landscape that have already affected these groups in recent years.”
[1] Reproduced from Mondaq