Tax: A key battleground
With the result increasingly unpredictable, what do you need to know about the parties' proposals for tax?
As the polls are looking as unpredictable as ever, Smith and Williamson has prepared its guide to the various parties’ tax proposals following the publication of their General Election manifestos and various announcements.
Although an election was not due until May 2020, a call for a snap election by the Prime Minister received an overwhelming majority in the Parliamentary vote, resulting in the upcoming 8 June 2017 General Election.
Tax remains a key battleground amongst the parties. While Labour has provided a more detailed funding document in an attempt to support its manifesto, the Conservative manifesto gives little away on tax detail beyond previous announcements.
As with the previous General Election, tackling tax avoidance and evasion remains a key pledge for the main parties. The introduction of a land value tax also appears a popular option although there is no detail of what exactly this would seek to tax and whether it would replicate the long-dead development land tax. There has been a strong reaction from many around plans to deal with the funding of social care, resulting in further announcements.
As we approach the election, the opinion polling for the popular vote appears to show an ever decreasing Conservative lead and therefore it is very difficult to predict which tax policies may come into force in any new government’s first budget.
So, what do taxpayers, both individuals and businesses, need to think about before the election? It may sound cynical, but it is not unusual for any new government to implement the majority of significant tax policy changes, including tax rate increases at the start of its term in office, well away from the next election. Will income tax and national insurance be merged? Will tax rates increase sharply, thresholds change or new taxes be introduced? The tax triple lock ends with the general election, so whichever party is in power taxes are likely to rise.
We suggest some particular areas to consider in the run up to the election and soon after. Taxpayers may decide to take pre-emptive action, while others may wait to see the colour of the Commons before taking action; however, it is important that decisions are driven by commercial or other non-tax reasons – though political events may understandably affect the timing of those decisions.
Our summaries and comments are based on information available and analysed up to 26 May 2017. Thanks to my small team of tax gurus, who have trawled through the manifestos, we have set out an overview of the parties’ proposals, split between those for businesses, private clients and in terms of general measures, as well as some actions you may wish to consider.
Note that we have imported terms and words from the manifestos, they are not all our own. We have not assessed the economics of the proposals; though we appreciate that tax is one side of the economics equation – we are tax advisers.
We live in interesting, if not nail-biting times!
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.
This article was previously published on Smith & Williamson prior to the launch of Evelyn Partners.