The general election is now just a few days away. What tax policies are the main parties proposing?
Conservatives
The headline proposal is the Conservatives’ pledge to keep the corporation tax rate at 19%, having previously planned to reduce it to 17% from April 2020. The Conservatives are offering a 1% increase to R&D tax credits and the structures and buildings allowance, along with a £1,000 increase to the employment allowance. The party has also promised that it won’t increase the rates of income tax, VAT and NI and will eventually increase the NI threshold so that it is in line with income tax (£12,500).
Despite the recent changes to entrepreneurs’ relief the manifesto mentions further reviews and reform in this area.
Labour
The Labour party is proposing to tax dividends and capital gains at income tax rates and increase income tax rates to 45% for those earning over £80,000. Income or capital gains over £125,000 will be taxed at 50%. Labour also plans to abolish entrepreneurs’ relief, the marriage allowance and R&D tax credits (for large companies).
Labour would like to reintroduce the small profits rate for corporation tax. The small profits rate will be 21% and the main rate of corporation tax will reach 26% by 2022.
20% VAT will be introduced on fees for private schools along with a 200% council tax levy on holiday homes under a Labour government.
Liberal Democrats
The Liberal Democrats are proposing 1% increases to income tax and corporation tax rates. The party also wants to abolish the capital gains tax annual exemption and increase council tax on second homes by 500%.
The Liberal Democrats also plan to expand the apprenticeship levy and the scope of R&D tax credits.