We'll be regularly updating this portal with information and commentary on the UK's General Election 2019, with a specific focus on the tax news as that arrives. We'll also be collating the tax information in the handy table below.
Manifesto Tax Portal
Overview
Current tax rates and manifesto pledges
Party specific tax updates
Real estate taxation: comparison of the manifestos
We have compiled a brief summary of the main taxation changes that will be relevant to the real estate sector from the main party manifestos and accompanying documents.
The Conservative announcements in relation to the taxation of real estate
The Labour manifesto proposals relevant to taxation of real estate
The Liberal Democrat manifesto proposals in relation to the taxation of real estate
26 November 2019
The Conservative manifesto includes the following proposals in relation to taxation:
Corporation Tax
- Corporation tax to remain at 19% (shelving the proposed cut to 17%).
- Increase the tax credit rate to 13% (from 12%) and review the definition of R&D so that 'investments in cloud computing and data, which boost productivity and innovation, are also incentivised'.
Income Tax
- National Insurance threshold to be raised to £9,500 next year (April 2020). Ultimate ambition is to ensure that the first £12,500 earned is free of tax.
- No increase in income tax or national insurance.
- One-year employer NICs break for employers that hire people up to one year after they have left the armed forces.
Capital Gains Tax
- Review and reform Entrepreneurs' Relief.
Property
- Introduce a 3% Stamp Duty Land Tax surcharge for those buying property who are not UK tax residents. This will apply to companies as well as individuals.
Other
- Remove VAT from female sanitary products post Brexit.
- Implementation of the Digital Services Tax.
- Address the ‘taper problem’ in doctors’ pensions, which 'causes many to turn down extra shifts for fear of high tax bills' and to hold an 'urgent review' working with the British Medical Association and Academy of Medical Royal Colleges to solve the problem.
- Increase the Employment Allowance for small businesses from £3,000 to £4,000.
- Reduce business rates for retail businesses, as well as extending the discount to grassroots music venues, small cinemas and pubs.
- A review to improve support for the self-employed including improving their access to finance and credit, making the tax system easier to navigate.
Tax System
The Conservatives have pledged to create a single Anti-Tax Evasion unit in HMRC that covers all duties and taxes, from individual errors to deliberate non-compliance and to double the maximum prison term to 14 years for individuals convicted of the most serious examples of tax fraud. They also plan to introduce a new package of anti-evasion measures including measures to 'end tax abuse in the construction sector, crack down on illicit tobacco packaging and further measures to avoid profit-shifting by multinational companies to avoid paying taxes.'
26 November 2019
Labour's manifesto is called "It's Time For Real Change" and, if implemented, their tax proposals would certainly radically alter the current tax landscape. In an election campaign where Brexit and public spending issues have dominated the headlines, the tax policies that had previously been trailed by the two main parties had largely been amendments within the boundaries of the current tax regime e.g. Labour's proposal to increase income tax for those earning more than £80,000 and the Conservative's pledge to reduce national insurance contributions. However, the proposals unveiled in the Labour manifesto and the related documents "Funding Real Change" and "Labour's Fair Tax Programme" include a variety of major changes to the structure and scope of current UK taxation.
This article briefly discusses the following aspects of this:
- changes to corporate taxation;
- use of tax to disincentivise "bad" behaviour;
- introduction of a new form of financial transaction tax;
- removal of "legal loopholes";
- public filings of tax returns; and
- removal of the preferential tax treatment of profits from wealth.
Conclusion
The Labour tax proposals go far beyond tinkering around the edges of the current tax system and, arguably, given their scope, even playing within its rules. Although Labour considers that its policies are fully costed, the scale of the changes make their impact on government revenues, taxpayer behaviour and the attractiveness of the UK as a place to do business hard to assess. Whether we are given an opportunity to find out how accurate those costings prove to be is now a question for the electorate.
25 November 2019
The Green Party Manifesto provides in relation to tax that the Green Party would:
Corporation Tax
- increase the rate of corporation tax to 24%.
Income Tax and Capital Gains Tax
- merge Employees National Insurance, Capital Gains Tax, Inheritance Tax, Dividend Tax and Income Tax into a new single Consolidated Income Tax.
- tax income from investments and assets at the same level as income from work through the Consolidated Income Tax.
- phase the Consolidated Income Tax in over a ten year period with reliefs (unspecified) to be made available.
- abolish the non-dom regime.
Other
- support small businesses by reducing VAT on food and drink served in pubs, bars and restaurants, on hotel bookings and on theatre, music concert and museum and gallery tickets.
22 November 2019
The Labour Manifesto states that Labour would:
Corporation Tax
- gradually reverse cuts to corporation tax to reach 21% (Small Profits Rate) and 26% (main rate).
- treat international corporate groups under common ownership as unitary enterprises, so that 'profits are declared where economic activity occurs and where value is created.'
- undertake a widescale review of corporate tax reliefs.
Income Tax
- ensure an additional rate of income tax (45%) is payable from £80,000 and a new "super-rich rate" (50%) is payable from £125,000 (with National Insurance and income tax rates frozen for everyone else).
- abolish the lower rate for dividend income and equalise dividend income with other rates of income, as well as removing the dividend allowance above a de minimis threshold of £1,000.
- The Manifesto also alludes to Labour removing ‘non-dom’ status.
Capital Gains Tax
- Tax capital gains at income tax rates.
- Remove the separate annual exempt allowance for capital gains, above a de minimis threshold of £1,000.
- Scrap Entrepreneurs Relief in its current form.
- Ensure primary residences to continue to be exempt from capital gains tax.
Other
- charge VAT on private school fees.
- abolish the Married Persons Allowance; and
- reverse George Osbourne's Inheritance Tax cut (which could mean returning to the simple nil rate band of £325,000 per person).
Tax System
Labour has also promised to launch the “biggest ever crackdown on tax avoidance and evasion and to reform the inefficient system of tax reliefs" and has pledged to "transform the power and resources of HMRC."
22 November 2019
The Liberal Democrat manifesto includes the following proposals in relation to taxation:
Corporation Tax
- Increase corporation tax to 20% (to be kept stable going forward).
- Allow companies to claim R&D tax credits against the cost of purchasing datasets and cloud computing.
- Simplify business taxation to lower admin costs and reduce tax avoidance opportunities.
Income Tax
- Ensure a 1% rise in all income tax rates (to be ring-fenced for NHS and social care services).
- Establish dependent contractor employment status and review the tax and NICs status of employees, dependent contractors and freelancers to ensure fair and comparable treatment.
- End retrospective tax changes like the loan charge and review recent proposals to change the IR35 rules.
Capital Gains Tax
- Abolish the separate CGT allowance and taxing salaries and capital gains through a single allowance.
Property
- Replace Business Rates in England with a 'Commercial Landowner Levy' based solely on the land value of commercial sites rather than their entire capital value.
- Set rates of stamp duty land tax relative to the energy rating of the property.
- Allow local authorities to increase council tax by up to 500% on second homes with a stamp duty surcharge on overseas residents purchasing such properties.
Other
- Scrap the Marriage tax allowance.
- Cut VAT on electric vehicles to 5% and reduce VAT on home insulation.
- Reform taxation of international flights to focus on frequent flyers.
Tax System
The Liberal Democrats have also promised to tackle tax avoidance with: (i) the introduction of a General Anti-Avoidance Rule, (ii) more staff for HMRC, (iii) reform of the place of establishment rules to stop multinationals shifting profits out of the UK, (iv) improvements of the Digital Sales Tax and, (v) building on the OECD's proposals to require multinationals to pay tax in a way which is more closely related to their sales in each country.
22 November 2019
Boris Johnson announces a 3% stamp duty surcharge for non-UK residents buying UK property.
Read the Telegraph's coverage on this news.
22 November 2019
Boris Johnson announces an increase in the National Insurance threshold. Workers will have to earn more than £9,500 following a Conservative post-election budget before they pay National Insurance contributions. It is proposed that this will increase to £12,500 but without a timeframe being outlined. Read the BBC's article on Boris Johnson's pledge.
21 November 2019
At the CBI conference on 18 November Jeremy Corbyn told delegates that those at the top will have to pay their 'fair share' under a Labour administration. But he said that he would work closely with business "because it’s in our common interest to build the high skills green economy of the future".
In his speech to the conference Boris Johnson pledged to cut business taxes such as Business Rates and NI contributions. This is in addition to his reversal of the planned corporation tax cut (see our post here). In his Q&A session he was asked whether he would abolish Entrepreneurs' Relief (as called for by Sir Edward Troup, the former Executive Chair of HMRC (see our post here) but he would not be drawn.
20 November 2019
Labour confirms that its proposals for "inclusive ownership funds" requiring some companies to put at least 10% of their share capital into an employee trust will feature as part of its election manifesto. Read more on this story [Paywall].
19 November 2019
Sir Edward Troup, the former Executive Chair of HMRC, has called for the abolition of entrepreneurs' relief by the incoming government, following December's general election. This is against a growing backdrop of thinktanks and professional bodies calling for its abolition, including Tax Research UK, the Association of Accounting Technicians and the IPPR.
Read the Guardian's article on Sir Edward Troup's call to scrap tax relief here.
Read the IPPR's recent paper: Just tax: reforming the taxation of income from wealth and work.
19 November 2019
Boris Johnson announces that corporation tax will not fall to 17% in a conservative administration. The headline rate of 19%, one of the lowest in the EU, is of course but one element of the 'effective tax rate' which is also impacted by exemptions and reliefs such as R&D credits which the conservatives are proposing to increase.
19 November 2019
The Institute for Public Policy Research (IPPR), a think tank which informs many Labour policies have suggested that capital gains tax rates and income tax rates should be taxed at the same rates: ''We propose that income from wealth should be taxed the same as income from work. Capital gains should be taxed at the same rates as income from employment, and the separate reliefs applied to capital gains tax (CGT) should be abolished.'' For further detail, see the IPPR's recent paper: Just tax: reforming the taxation of income from wealth and work.
Watch this space for updates on Labour's proposals – we expect that it is more likely that, if elected, Labour will reverse the reductions in CGT rates brought in by the Conservatives (raising basic and higher rates from 10%/20% to 18%/28%) rather than align capital and income rates.
19 November 2019
Boris Johnson to announce cuts to employer's National Insurance as part of a range of tax cuts to win over the business community. Read the Evening Standard's article on Boris Johnson's tax cuts pledge here.
19 November 2019
Liberal democrats have proposed to add 1 penny on income tax to fund an extra £7billion a year for the NHS and social care. Read The Telegraph's article on the proposed policy here.
19 November 2019
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