26 May 2017 by

Political Parties Tax Promises – compared (Part One)

With another general election fast approaching we have compared and contrasted the mainstream English political parties’ manifestos in relation to their tax plans and see how these have changed since the last election in 2015.

Given the surprise nature of the ‘snap’ election, there is not as much detail on tax policy as in the 2015 election manifestos.

However, given the change in leadership and direction in all the main parties, some of the changes could be considerable.

In this part one of two we look specifically at Inheritance Tax, Capital Gains Tax, National Insurance, and Pension tax.

Inheritance Tax (IHT)

The Conservative Government has fulfilled one of its inheritance tax promises contained in its 2015 Manifesto and introduced an additional tax free amount for family homes. By April 2020 an additional relief of £175,000 per person on a family home can be transferred between married couples, which adding to the existing £650,000 combined allowance for married couples will result in properties worth up to £1m escaping IHT all together.

Surprisingly, there has been no mention of inheritance tax by the Conservatives or Labour in their current manifestos, but the Liberal Democrats have pledged to reverse the changes made to inheritance tax by the current Government. UKIP on the other hand have promised to raise the inheritance tax tax-free threshold to £500,000 per individual (with no stipulation as regards the family home) and aim to eventually scrap inheritance tax altogether.

The Green Party have proposed that inheritance should be taxed according to the wealth of the recipient, but add little further ‘meat’ to this claim in their manifesto.

Capital Gains Tax

From April 2016, capital gains tax was reduced from 28% to 18% for residential property, and from 20% to 10% for other chargeable assets, for capital gains falling within the basic rate band.

Again there is very little in the Conservative and Labour manifestos about Capital Gains Tax, but the Liberal Democrats have stated that they will remove the Capital Gains Tax cuts brought in by the current government.

National Insurance and Pension Tax

Labour again promise not to increase the amounts of National Insurance currently payable, with the Conservatives replacing Cameron’s “tax triple lock” (i.e. no rises in national insurance, VAT or income tax) in favour of a general statement of intent to lower tax and simplify the tax system.

In contrast to 2015, the Labour Party has not said anything about cutting pension tax relief.

The Liberal Democrats have suggested a review into a single rate of tax relief for pensions which would be set more generously than the current 20% basic rate relief.

Next week we will look at the parties plans for Income Tax, VAT, Corporation Tax, New taxes and tax enforcement

If you think that any of these changes might affect you or you consider that you need advice with regard to Tax Planning please contact one of our solicitors in the Wealth Planning team here.

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