With the 2019 General Election in just over two weeks and campaigning now in full swing we have summarised some of the tax policies which have been announced by the three main parties.
- Corporation tax – the previously proposed target rate of 17% in 2020 has been dropped and therefore rates will remain at the current 19%.
- Increase in the Research and Development (R&D) tax credit rate from 12% to 13%.
- No increases in Income Tax, National Insurance or VAT in the next 5 years.
- National insurance threshold to be increased from £8,628 to £9,500 next year with an aim of eventually increasing it to £12,500.
- Capital Gains Tax – there will be a review and possible reform of Entrepreneur’s Relief.
- An additional 3% of Stamp Duty Land Tax on properties purchased by non UK residents.
- A Corporation Tax rate for profits below £300,000 will be reintroduced.
- Corporation tax rates over the next 3 years are planned to be as follows:
Main Small Profits
2020/21 21 19
2021/22 24 20
2022/23 26 21
- There will be a review of existing corporate tax reliefs.
- R&D tax credits for large corporations will be phased out, but R&D relief for small and medium companies will remain.
- The Patent Box relief will be abolished.
- Income tax rates to be increased at the following income levels:
- Over 80,000 – 45% rate; and
- Over £125,000 – 50% rate.
- The transfer of an unused personal allowance between a married couple would be stopped.
- Tax rates on dividends will increase as they will be taxed at same rate as all other income.
- The dividend tax free allowance of £2,000 will be abolished.
- Capital gains will be taxed at the same rate as an individual’s marginal income tax rate.
- Capital Gains Tax Entrepreneurs Relief will be scrapped.
- There will no longer be a separate capital gains tax annual exemption but any gain under a £1,000 will be exempt.
- Inheritance Tax – the residence nil rate band is to be abolished.
- VAT will be charged on private school fees.
- A second home levy will be introduced on holiday homes equivalent to 200% of the current council tax bill.
- The Corporation tax rate will increase to 20%.
- Business rates will be reformed and replaced with a land value tax levied on the property owner.
- All Income tax rates will be increased by 1%.
- There will be an increase in Air Passenger Duty for frequent flyers.
- The Capital Gains Tax annual exemption will be abolished.
We will provide updates on any tax changes which are actually implemented following the general election. In the meantime if you would like any further information, please contact our assistant tax manager, Jamie Poulton.