The Conservative Party has sent me a tax calculator to enable me to work out the impact of a change to a Labour Government. They reckon it will cost me £4,757 more per year. A large part of the increase would be from suggested new Council Tax bands in England over the next 4 years. Otherwise I think the Labour Party might challenge the calculations.
For a more sober review of the different parties tax plans, AJBell have produced a useful analysis you can read here: https://www.ajbell.co.uk/articles/investmentarticles/277363/how-main-parties-compare-tax-and-personal-finance?
As it points out, the main parties have all promised no increases in income tax, national insurance and VAT. But none have promised to do anything about the frozen tax thresholds which has resulted in much higher tax being paid by many people.
The Green Party would introduce a wealth tax which would undoubtedly be a nightmare to collect even if it might affect few people. And assets and people would undoubtedly move overseas to avoid. Not a very practical idea.
Capital Gains Tax would undoubtedly be a target for the Labour Party. They would scrap the use of “carried interest” in the private equity sector where capital gains tax is applied instead of income tax. I think this is a reasonable change to make. They would also raise revenue from applying VAT and business rates to private schools and from closing further non-dom tax loopholes. They would also invest in reducing tax avoidance (easier said than done) which all parties seem keen on. In addition they would extend the Windfall tax on oil and gas giants and would almost certainly kill off any new North Sea developments.
Labour have also indicated a wish to align rates of capital gains tax to income tax although this is not specifically mentioned in their Manifesto. This would have a major impact on the few people like me who pay capital gains tax although in essence it is a sensible idea. Why? Because it’s easy to change income into capital gains, or vice-versa. Nigel Lawson (no relation) was keen on this idea but only partly implemented it. However the big issue is whether the capital gains are real gains in periods of high inflation as we have recently experienced. In reality people have been taxed on gains that are a mirage. That needs reforming! Only the LibDem manifesto makes a suggestion to tackle this issue.
The LibDems would impose a 4% tax on share buy-backs on FTSE-100 companies so as to incentivise “productive investment”. This is an interesting idea and as I always vote against share buy-back I would support this.
The main parties do not mention Inheritance Tax but Reform would abolish it for estates under £2 million and reduce it to 20% for those above. Reform would also scrap VAT on energy bills and abolish the IR35 rules that impact sole contractors. They would also provide 20% tax relief on all private healthcare and insurance – surely a wise move to encourage less reliance on the NHS.
I don’t think any of the party manifestos including their tax proposals will affect how people vote. They are more interested in housing provision, immigration and NHS services.
Roger Lawson (Twitter: https://twitter.com/RogerWLawson )
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Thank you Roger, a very good summary of the key tax points from all parties. And, sadly, a correct conclusion that most will pay no attention to anything other than immigration, housing and NHS provision.