With the General Election 2019 only just over a week away (Thursday 12 December), our Tax Partner, Dominic Crilly, takes a look at the manifestos of the three main parties (in alphabetical order) and summarises some of the main tax pledges promised and highlights some possible tax planning opportunities.

Conservatives

  • First of all, the Conservatives are promising a “triple tax lock”, meaning that they are promising not to increase income tax, national insurance or VAT rates
  • Raise the national insurance threshold from the current £8,632 to £9,500 by 2020-21
  • Increase the employment allowance
  • Pause planned cut to corporation tax from 19% to 17%
  • Increase the rate for R&D tax credits to 13% and review the definition of R&D
  • Introduce new anti-tax avoidance and evasion law, such as doubling the maximum prison term to 14 years
  • Implement a Digital Services Tax to ensure multinational companies pay their share of tax
  • Reduce business rates and review the system
  • Review and reform Entrepreneurs’ Relief

Labour

  • CGT allowance and dividend allowance would be cut to £1,000, with dividends and gains taxed at the same rate as income
  • Plans to expand stamp duty charges to all trades in equity and credit derivatives, corporate bonds and forex, excluding holiday money
  • Reduce income tax threshold for 45% rate from £150,000 to £80,000 and introduce 50% rate from £125,000
  • Abolish the Married Persons Allowance
  • Charge VAT on private school fees; no increase in rates of VAT
  • Increase corporation tax rate to 26% and 21% for companies with low profits; review reliefs; phase out R&D tax credits
  • Reverse previous cuts to inheritance tax
  • Reverse previous cuts to bank levy
  • New taxes on multinationals
  • Annual tax on second homes

Liberal Democrats

  • Scrap the CGT allowance, with capital gains and salaries to be taxed through  “single allowance”
  • Increase all rates of income tax by 1 percentage point
  • Scrap the Married Persons Allowance
  • Increase corporation tax from the current 19% to 20%
  • Replace business rates in England with a commercial landowner levy
  • Reform air passenger duty to tax frequent flyers
  • Reduce tax evasion and avoidance by increasing funding for HMRC, reforming place of establishment rules

Whilst it is possible that a new government might bring in tax changes with immediate effect on election day, it is more likely that changes will be delayed until a Budget Day announcement or even 6 April 2020. Actions which might be considered include the following:

  • The Conservatives are reviewing Entrepreneurs Relief, and it is likely to become less attractive than at present. Take advantage of it now if you can!
  • Labour and the Liberal Democrats are looking at increasing income tax for higher earners and capital gains tax. It might pay to bring forward income or capital gains receipts, for example, paying a dividend earlier rather than later to try to protect against this.
  • Labour might also put VAT onto school fees. Are you in a position to pay school fees early to pre-empt this?

Also do bear in mind that there will probably be time to take such actions after the election result has been announced.

For further advise please contact our specialist Tax team.

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