Loading…

General Election 2019: effect on taxes in the Conservative and Labour Party manifestos.

Once again Brexit is dominating the headlines but with an election looming, what key elements of the main parties’ manifestos might you be missing? This article highlights the tax proposals from the Conservatives and Labour party that are set to affect individuals.

Income Tax

The Conservatives have proposed a commitment to a “Triple Lock” on taxes, which means there would be no increases in the rates for Income Tax, National Insurance and VAT for the next five years. Curiously, Boris Johnson’s previous announcement in the Conservative leadership election in the summer to increase the point at which you stop paying 20% basic rate income tax to £80,000, is absent from the manifesto.

Labour have committed to increase taxes on certain individuals, who they refer to as the “top 5%”. To this end their manifesto states that:

  • The threshold for the additional income tax rate of 45% would be lowered from £150,000 to £80,000, which means that those earning over £80,000 will pay significantly more tax.
  • Individuals earning £125,000 and over will face a new Income Tax rate of 50%.
  • There is a proposal to tax the dividends at the same rate as Income Tax.  Dividends are currently taxed at the lower rates of 7.5%, 32.5% and 38.1% whereas other income is taxed at 20%, 40% and 45%. 
  • Marriage Allowance is proposed to be abolished. This has caused some controversy, as Marriage Allowance is not available to couples where at least one of them earns more than the basic rate of tax, and so they are not in the “top 5%.”

Capital Gains Tax

As noted above, there are no specific proposals regarding Capital Gains issued by the Conservatives.

Labour proposes to tax capital gains at the income tax rate. The current tax rates for capital gains are 10% and 20% for higher rate (18% and 28% for residential property), whereas income tax rates are much higher. There are also proposals to remove the capital gains tax annual exemption and Entrepreneurs Relief.

Other tax implications

The Conservatives have promised to keep the National Insurance rates the same, but raising the threshold from £8,628 to £9,500 on the Government’s first Budget, and with an ultimate ambition to raise the threshold to £12,500.

Labour has proposed a new tax for second homes. The current suggestion is that they would introduce a tax on properties considered holiday homes, and that this would be equivalent to 200% of the council tax bill in question.

The outcome of this election will soon be known. If you have any concerns about the possible implications of any of the points outlined above, please don’t hesitate to contact our team. 

 

Get in touch with our Private Client team?

To enquire about any of the issues raised in this article, complete the form below to get in touch with a member of our Private Client team.

Please verify yourself above.
Please complete all required fields above.
You might also be interested in… Tax planning and advice for individuals.

UK personal tax compliance

We see the Tax Return as a window into our client’s life and the best way for us to get to know each other very well. We aim to see that the right amount is paid at the right time on the basis of full, accurate and timely disclosure. 

We assume a role somewhere between trusted adviser and knowledgeable friend – a role vital in ensuring clients are able to keep and enjoy more of what they earn and bequeath it to the next generation.

UK personal tax planning

UK tax is constantly changing and you will have events that require tax planning (e.g. a possible investment into a business or sale of an asset) while also having ideas of how you would like to use your wealth to benefit you and your family (e.g. via gifts or the creation of trusts).

We aim to ensure that you make the most of the tax legislation, while being cautious and reasonable in our approach to tax planning.

Do you have your UK tax rates cards for 2019/2020 yet?

If not, then don’t worry, we’ve got it here for you. This useful guide has all the year’s tax rates for 2019 and 2020 in one place, making it easy for you to refer to throughout the year. Included in the guide is everything from the main Income Tax and Corporation Tax rates, through to deadlines and allowances. Download the tax rates guide now and see what they mean for you this year. 

2019 and 2020 UK tax rates and allowances

Non-Doms and Non-UK Residents

Foreign domiciled UK residents have access to some very beneficial tax rules but those benefits come with complexity, which is ever increasing. We help those who are yet to come to the UK, are already here or those who have left to ensure that they make the most of the available rules.

For anyone outside the UK who owns UK real estate (including non-UK companies), we help them with their ongoing tax compliance and any related tax planning.

US tax

If you’re a US citizen living in the UK or you’re planning to move here, there will be a number of important life stages that you will need to plan for. Our dual-qualified US and UK tax experts have an intricate understanding of both systems. Tell us your story and together we’ll assess your liabilities and tackle any issues before they become an issue.