General Election 2019 - What Do the Parties Offer?

November 2019
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Personal Taxation

The three parties contesting the General Election on a UK wide basis have now published their manifestos. We have examined their pledges on personal taxation.
 

Taxation Now Conservative Labour Liberal Democrat

Income Tax rates and allowances [1]. First £12,500 0%, £5,000 savings 0%, up to £50,000 20% allowance, £50,001 40%, £150,000 45%.

Freeze income tax rates and maintain current bands. 40% on incomes over £50,000, 45% for incomes over £150,000.

Increase tax for incomes over £80,000 to 45% and £125,000 50%.

Increase all rates by 1p to 21% up to £50,000, 41% over £50,000, 46% over £150,000.

Marriage Allowance 
Worth £250 pa for basic rate taxpayers, and more for couples over age 84.

No change

Abolished

Abolished

National Insurance 
Employees pay 12% of earnings between £8,632   and £50,000 and 2% above this.

Increase the starting band to earnings of £9,500 pa saves £100 pa. Ambition to increase to £12,500 over 5 years.

No change

No change

Income from Savings Interest.
If other income does not exceed £12,500, up to £5,000 tax free with tapered allowance, where other income over £12,500-£17,500.
Tax free allowance of £1,000 for 20% 
taxpayers, £500 for 40% taxpayers. No allowance for top rate (£150,000 income) taxpayers.

No change

No change to 
allowances for 20% and 40% taxpayers but those with incomes over £80,000 would have no allowance.

No change to allowances.

Dividend Income 
Dividends under £2,000 are tax free, then taxed at 7.5%, 32.5% and 38.1% for 20%, 40% and 45% taxpayers. 

No change

Reduction in dividends allowance to £1,000. Taxed as income at 20%,40%,45% and 50%.

Abolish dividends 
allowance.  Not clear what tax rate would 
apply.

Capital Gains

No change, allowance of £12,000 pa, 10% and 20% rates, 18% and 28% on residential property not main home.

Reduce allowance to £1,000, increase tax rate to income tax rates when gain added to income, so 20%, 40%, 45%, 50%.

Abolish separate 
allowance, merge with income tax allowance.  Unclear on tax rate to be applied.

Inheritance Tax

Tax on estates of 
deceased 

If left to spouse exempt

Estates may leave £325,000 tax free, if estate includes main residence up to £175,000 tax free from April (£150,000 currently) 40% tax on balance.

Abolish the residence nil rate band currently £150,000, rising to £175,000 from April.

No detailed policy set out on existing reliefs [2].

Inheritance Tax on
Lifetime Gifts

£3,000 pa tax free plus small gifts, gifts on 
marriage, to spouse and regular gifts are exempt. Larger capital gifts are added back into the 
estate if death occurs within 7 years, with a tapered allowance 
applying from 3 years onwards. 

No change 
Conservatives have 
indicated they will review the proposals to simplify lifetime gifting as 
recommended by the Office of Tax Simplification, this could include a reduction to 5 years when lifetime gifts are added back, but with taper relief abolished.

Not in the manifesto, but support from Labour for a tax on recipients of gifts exceeding £125,000 over a lifetime at income tax rates.

Recipient of the gift to be taxed once the cumulative lifetime allowance of £250,000 has been received.  Not clear what the rate of tax would be.

Would retain spouse exemption, some business property exemption and gifts for education.

Second Homes Tax
Extra 3% stamp duty on purchase. Capital gains tax on sale at residential property rates of 18%-28%.

No change for UK
 residents. 
Extra 3% stamp duty for foreign purchasers.

Annual tax charge of 200% of council tax. Gains on sale taxed at income tax rates with £1,000 allowance.

Annual tax charge 500% of council tax.
Gains on sales taxed with no separate allowance. Foreign buyers stamp duty surcharge. 

 

Kay Ingram
Director of Public Policy, LEBC 

Please remember, no news or research item is a recommendation or advice to buy. LEBC Group Ltd is not responsible for accuracy and may not share the author’s views. The contents of this blog are for information purposes only and do not constitute individual advice. All information is based on our current understanding of taxation legislation and regulations. The Financial Conduct Authority does not regulate estate planning, tax advice, wills or trusts.       

[1] Income Tax rates apply to the UK except Scotland where setting tax rates is  devolved.
[2] https://www.withersworldwide.com/en-gb/insight/liberal-democrat-and-snp-tax-policies-what-to-expect, accessed 26/11/2019
      https://vote.conservatives.com/our-plan, accessed 26/11/2019   
      https://labour.org.uk/manifesto/ https://www.libdems.org.uk/plan, accessed 26/11/2019

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