Who will have the keys to number ten after the 2015 election
With 18 months to go until the next General Election, the main political parties have been busy recently suggesting what they might do with regard to tax if they got elected. Many of these proposals will not see the light of day for a variety of reasons, but they’re an indicator of what we can expect, depending on where we place our X on the ballot paper.
So I’ve trawled the recent party announcements on tax and here’s what I found:
Labour
- Ed Miliband seems keen to bring back the 10p rate of income tax abolished by Gordon Brown, but hasn’t said how big the tax band will be or what effect it will have on the amount of your personal tax-free allowance.
- Ed also what to raise corporation tax on large companies, but hasn’t said what size of company nor the level of tax
- Shadow Chancellor Ed Balls, wants to re-instate the 50p top rate of tax, but hasn’t said at what level of income
- Ed balls has also spoken vaguely about one-off windfall levies on energy companies and the big banks.
Conservatives
- Their policy think-tank is proposing that stamp duty should be scrapped on all homes worth less than £500k, this however is a loss leader for what Chancellor George Osborne wants which is no duty up to £250k
- The Tories are also keen to raise the earnings threshold for the 40% higher-rate income tax to £50k a year
- The Chancellor states that he will continue with the gradual reduction in corporation tax so that within 4 years it will be at 20%, the lowest in Europe apart from Ireland’s 12.5%, to further encourage investment in the UK
- Keeping VAT at 20% but widening its scope, this will involve making some categories of goods/services currently exempt or zero-rated taxable at 20%. They haven’t specified the categories, but I strongly suspect that reading material such as newspapers and paperbacks will be one area, as will children’s clothing except for babies.
Lib-Dems
- Nick Clegg is proposing a further hike in the tax-free personal allowance for the 2015/16 tax year of £500
- Nick has also modified his “mansion tax” proposal and now says it will be called an “asset tax” payable annually based on 1% of the value of a property above a £2m threshold
- Vince Cable has suggested removing the exemption for foreign passport holders regarding capital gains tax on property (foreigners are currently exempt from paying tax on second home transactions)
So what is actually likely to happen?
Well for a start I haven’t got a crystal ball and secondly if Scotland votes for independence next year, that will ruin all parties calculations.
Given the coalition’s track record thus far, if they get in and continue in tandem I would expect all of what they’re individually proposing to be implemented after a bit of tweaking, except for the mansions tax and the widening of the scope of VAT.
Will Tax Policies affect who you vote for?
Ed Miliband and Labour are harder to read, mainly because they have been remarkably reticent as to what taxes they would raise to fund their various proposed give-aways such as free child care, more housing benefit and a reduction in the community charge. However as Ed is clearly to the left of the last two labour leaders, he will be expected by his supporters to expand the role of the state. As he has promised not to do this by increased government borrowing, he will have to raise taxes; the question will then be by how much and where.
I do not hold strong political views and have voted for all 3 of the main parties over the years, but I can’t see how the two Ed’s dream of using the muscle of private enterprise to sustain long-term economic growth can possibly go hand-in-hand with a considerable hike in personal and business taxes.
Hopefully all will become a little clearer, the nearer we get to Election Day.
Share Tweet
David Jones is the Senior Partner and Founder of Morgan Jones & Company. Born in Liverpool and an Accountancy graduate of the University of Wolverhampton, David spent twenty years working for the Customs & Excise in London then Shrewsbury before starting his own business. David's depth of knowledge of the UK tax system and his ability to communicate this learning has seen Morgan Jones & Company grow into Shropshire's most respected Accountancy Practice.