Tax pledges in the 2015 election manifestos

Transcription

1 Tax Services Tax pledges in the 2015 election manifestos With Thursday s general election still too close to call, a hung Parliament is widely expected and it is not clear which parties would be in a position to command a majority in the House of Commons and hence form a Government. The Liberal Democrat leader, Nick Clegg, has stated that his party will talk first to whichever of the Labour and the Conservatives has the most seats and votes. However, the Liberal Democrat membership must ratify any deal through a two thirds majority at a special party conference. The Scottish Nationalist Party (SNP) has pledged not to support a Conservative Government while the Labour Party has ruled out any formal agreement with the SNP. The Parliamentary arithmetic may well mean that three or more parties are required to reach a majority. The new Parliament will meet on 18 May to swear in new members and the election of a speaker. The State Opening of Parliament is expected to follow on 27 May, although it is not clear if this would have to be pushed back if a Government has not been formed by this date. Tax policies are likely to form a key part to any negotiations between the parties after the election. To help understand the possible outcomes, we have prepared this alert on the main tax-focused policies of the Conservative and Labour Parties, as well as the Liberal Democrats, SNP and other parties. The main rate of corporation tax is currently 20%. The Labour Party propose to increase this to 21% although they have also pledged to ensure the UK maintains the most competitive corporation tax rates in the G7. The Conservatives and the Liberal Democrats propose to maintain the rate at 20%, the Conservatives have committed to keeping the business tax regime the most competitive in the G20. Both the Conservatives and Labour will push for an international agreement to make country-by-country returns public, but if that cannot be achieved, Labour proposes to publish them anyway. The Liberal Democrats want to extend country-by-country reporting to all UK listed companies. Labour and the SNP both propose to re-introduce a bank bonus tax while the Liberal Democrats want to introduce a time-limited supplementary corporation tax charge on the banking sector. All parties have pledged to maintain the bank levy, which Labour and the SNP want to increase. Labour and the SNP also intend to increase the additional rate of income tax to 50% while all parties are suggesting restrictions to tax relief for pension contributions. The Conservatives and Liberal Democrats want to increase the personal allowance to 12,500 by the end of the Parliament. The Conservatives also want to increase the higher rate income tax threshold to 50,000. Labour and the SNP want to introduce a mansion tax, which Labour say will kick-in for properties worth over 2mn. The Liberal Democrats have plans for a banded high value property levy for residential properties worth over 2mn. The Conservatives want to increase the inheritance tax allowance by 175,000 for the main residence, transferable between spouses. Our table summarises some of the key plans of the main parties so that the commonalities (and differences) between them can be seen. In turn, this indicates how possible coalition negotiations might proceed.

2 Conservative Lib Dem Labour Scottish National Party Other parties Individuals Help for the lower paid Personal allowance to be increased to 12,500 by 2020 Married Increase the transferable marriage couples/ allowance in line with personal family wealth allowance Increase inheritance tax threshold for married couples and civil partners to 1mn, with a new transferable main residence allowance of 175,000 per person Income tax thresholds/ rates Pensions VAT/NIC Higher rate threshold starting at 50,000 (incl. personal allowance) Limit pension tax relief (> 150,000). Limit lifetime allowance for pensions (> 1mn) No increases in VAT, NICs or IT (with law to enforce this) Personal allowance to be increased to 12,500 by 2020 Increase employee national insurance contribution threshold to income tax threshold High earners pay more for their shares (> 150,000) Limit lifetime allowance for pensions (> 1mn), Introduce single rate of tax relief for pensions (more generous than current basic rate), protect low earner s pension and benefit entitlements Review VAT treatment of sixth form and further education colleges 10% starting rate of income tax Reintroduce 50% additional rate of income tax (> 150,000) Limit tax relief for pensions for top rate payers and reduce annual and lifetime allowances No increase in basic/higher rates of IT, NICs or VAT Incentives Maintain employee tax incentives Scrap Shares for Rights Scrap Shares for Rights Reintroduce 50% additional rate of income tax (> 150,000) Support limitations on pension tax relief UKIP would seek to increase the personal allowance to 13,500 by Plaid Cymru would support an increase in the level at which National Insurance contributions are paid to same level as income tax UKIP would seek to scrap inheritance tax. The Green Party would seek to raise 25bn a year by 2019 through a wealth tax of 2% on people worth 3m or more. It would also seek fundamental reform of inheritance tax. UKIP would introduce a new 30% tax band for those earning between 45,300 and 55,000 pa, and a 40% rate thereafter. Plaid Cymru would support the reintroduction of the 50% income tax rate for those earning over 150,000 pa. The Green Party advocates a 60% rate on salaries above 150,000 pa. Plaid Cymru would end pensions relief for higher rate tax payers. The Green Party would increase the number of items taxed at 5% to support the hospitality and tourism sector

3 Conservative Lib Dem Labour Scottish National Party Other parties Childcare Tax-free childcare and 30 hours per week of free childcare for three and four year olds Complete the introduction of Tax- Free Childcare. 20 hours free childcare a week for all parents with children aged from two to four-years, Tax-free childcare and 25 hours per week of free childcare for three and four year olds Support 30 hours per week of free childcare Property taxes Keep council tax low High Value Property Levy for properties (> 2m), increase Council Tax on second homes up to 200% Council Tax reduction of at least 100 for 10 years for energy saving improvements of at least two bands Mansion Tax (> 2m ) 0% stamp duty for properties under 300,000 for the first three years of Government Support a Mansion Tax Non-doms Increase charges for non dom status and tackle abuses Increase the non-dom charge and end ability to inherit it Remove the non-dom rule and replace with temporary residence relief Support the removal of the non-dom rule The Green Party also supports the removal of the non-dom rule Businesses Corporation tax Maintain the most competitive corporate tax regime in the G20 (20% rate in Russia, Saudi Arabia, Turkey) Country by country reporting Review case for making Countryby-Country reporting (CbCR) publically available on multilateral basis Ensure developing countries have access to automatic information exchange systems Maintain 20% corporation tax rate Set the most competitive corporate tax rates in the G7 (26.5% in Canada). Reverse the 1% cut so as to set the rate at 21%. Extend CbCR to all UK listed Make CbCR publically companies. Require large available, unilaterally if companies to publish tax payments necessary. and profits for each country in Require British Overseas which they operate Territories and Crown Dependencies to produce public registers of beneficial owners The Green Party would reinstate a large company rate, set at 30% Capital gains tax Reform capital gains tax The Green Party would remove the capital gains tax personal tax allowance

4 Conservative Lib Dem Labour Scottish National Party Other parties Business rates Major Business Rates review to conclude by the end of 2015 Replace Business Rates with LVT with interim reforms like Site Value Rating within five years. Cut then freeze Business Rates The Green Party also propose a LVT. UKIP propose a 20% relief from business rates for properties up to 50,000 Banks Consultation on restricting tax deductions for mis-selling payments Supplementary Charge on Banks (reversing CT rates cuts) 2bn Bankers Bonus Tax and Increase Bank Levy by 800mn a year Support Bankers Bonus Tax and increase in bank levy The Green Party support a Financial Transaction Tax Other Tax penalties Criminal Sanctions for failure to prevent tax evasion Criminal Sanctions for failure to Penalties for those caught by Penalties for those caught prevent tax evasion (e.g., penalties general anti-abuse rule (GAAR) by GAAR for directors and firms). Introduce a general anti-avoidance rule outlawing structures solely designed to avoid tax Anti-avoidance Assortment of anti-avoidance measures Bring in 14bn from tax rises on corporations and the wealthy. Reduce tax avoidance. Introduce HMRC targets for reducing the tax gap Assortment of anti-avoidance measures including removing tax breaks used by hedge funds, and cracking down on disguised employment. Review of HMRC culture and practice UKIP will set up a Treasury Commission to monitor the effectiveness of the Diverted Profits Tax and bring in any further measures necessary to prevent large multinational corporations using aggressive tax avoidance schemes Devolution Full devolution of income tax rates and bands to Scotland. Implement Wales and NI proposals. Veto for English MPs for English laws including on income tax Full fiscal federal devolution Introduce Devolution on Demand in England Some extension of Scottish powers for setting income tax and establish a constitutional convention. Put Welsh devolution on same statutory footing as Scottish devolution Full financial autonomy Prioritise devolution of certain powers including business taxes and national insurance The Green Party supports a constitutional convention and greater devolution. Plaid Cymru supports Wales taking greater responsibility for raising and spending major taxes. It believes that Wales should have the same taxation powers as Scotland. UKIP would continue with devolution of tax powers to Scotland (and presumably Wales) but reform the Barnett formula as a result.

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