With the June 8 election fast approaching, lets take a look at the tax policies outlined in the Conservative and Labour manifestos.
The Conservative Party have renewed 2010 pledges to increase personal allowance to £12,500 and increase the threshold for the higher rate tax band to £50,000.
Labour, meanwhile, have promised that only the top 5% of earners would be affected by tax rises- with the tax rate rising to 45p per pound for income above £80,000 and 50p for income over £123,000.
Labour have also proposed an “excessive pay levy” charging employers for any individual earning salary over £330,000.
Labour has promised that there will be no rises in national insurance, but the Conservatives have remained silent on the issue, following the removal of the controversial proposal to raise self-employed national insurance contributions (NICs) from the Spring Budget.
The Conservatives plan to reduce the current corporate tax rate of 19% to 17% by 2020. Conversely, Labour want to increase it to 26%, but promise to “protect small businesses by reintroducing the lower small profits rate of corporation tax”.
In an additional document titled “Funding Britain’s Future” the Labour party have pledged to reduce inheritance tax thresholds. The current Conservative policy allows up to £850,000 in family property to be inherited by children, and Labour’s proposed change would mean that families inheriting a property over £425,000 would have to pay 40% tax.
Making Tax Digital (MTD)
While MTD is not specifically mentioned in either manifesto, there is no evidence to indicate the Conservative party intend to abandon their original plans. The Labour party’s manifesto, however, pledges to “scrap quarterly reporting for businesses with a turnover of under £85,000”.