How will the general election affect your taxes?


With the general election set to take place on 12th December 2019, it is important to consider the tax implications of each party’s manifesto:

 

 

Conservatives

  1. Raise the National Living Wage.
    The Tories have stated their intention to raise the National Living Wage up to £10.50 over the next six years. While this would be the highest minimum wage in the developed world, it is a slower minimum wage rise than has been proposed by Labour.
  2. Freeze Corporation Tax.
    Boris Johnson cancelled a planned Corporation Tax cut, instead proposing that the Corporation Tax rate will remain frozen at 19%.
  3. Raise the tax-free Employment Allowance.
    A tax-free Employment Allowance of £3,000 is currently offered to businesses. This reduces the cost of having employees by reducing the Employer’s Class 1 National Insurance each time you run payroll. Conservatives have plans to raise this allowance to £4,000.
  4. Raise the Class 1 National Insurance threshold.
    The Class 1 National Insurance threshold currently stands at £8,632 per year. If you earn over this amount, you will start making NI contributions. Conservatives intend to raise this threshold to £9,500 in the next year, with an “ultimate ambition” of increasing it to £12,500.
  5. Income Tax, National Insurance and VAT to be locked at their current rates.

 

Labour

  1. Raise the National Living Wage.
    Labour intend to raise the National Living Wage to a minimum of £10.00 in the next year. This is a faster timeline than that proposed by the Conservatives.
  2. Raise Corporation Tax.
    Unlike the Tories, Labour are planning to raise the Corporation Tax rate from 19% to 26%.
  3. Abolish Marriage Allowance.
    Jeremy Corbyn has stated that Marriage Allowance will be removed. Marriage Allowance allows the transfer of £1,250 your Personal Allowance to your husband, wife or civil partner – if they earn more than you.
  4. Introduce new Income Tax brackets.
    Labour propose that there should be a new 45% tax-rate for people earning over £80,000, as well as a further 50% tax bracket for those earning over £125,000.
  5. Dividends to be taxed similarly to income.
    Dividends are payments made to company shareholders from the profits of a company, after Corporation Tax is deducted. They are currently taxed at lower rates than employed income. Labour’s manifesto intends for these tax-rates to increase such that they will be similar to the income tax brackets. For a significant portion of the more than 5 million self-employed in the UK, this proposed increase could be a very painful tax-hike.

 

Liberal Democrats

  1. Raise Income Tax by 1%.
  2. Raise Corporation Tax.
  3. Raise Capital Gains Tax.

 

The Brexit Party

  1. Abolish Inheritance Tax.
  2. Lower Corporation Tax.

 

Alongside the tax policies above, you need to consider where the parties stand on other major issues such as education, the environment, crime etc.

Make your opinion count by voting on 12th December 2019.

 

Sources: The Sunday Times, The Guardian

Image source: unsplash.com

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