It’s Not All About Brexit
It seems more than likely that we will have an election in the not too distant future. Whilst any snap election could be based around the BREXIT debate it is worthwhile considering what the fiscal policies of both major parties are.
In the blue corner we have Boris Johnson (BJ) and Sajid Javid (SJ) and in the red corner we have Jeremy Corbyn (JC) and John Macdonald (JM).
JM has stated that the key underpin of his tax strategy is to deliver an “irreversible shift in wealth and power in favour of working people”. SJ has a budget coming up where he can express in detail the Conservative plans, to date the thrust of Conservative policy is “low tax and stimulation”.
INCOME TAX RATES
JM has confirmed his views on tax bands so we can compare his comments against those of SJ:
|20% tax to:||£80,000||£50,000|
|40% tax to||£150,000||£80,000|
|45% tax to||Rest||£123,000|
|50% tax on income >||£123,000|
|2.5% Employer tax earnings >||£300,000|
|5% Employer tax earnings >||£500,000|
The employer taxes are “an excessive pay levy”
BJ has indicated an increase to the tax free band and the basic rate bands in line with the above. We don’t know JM’s approach.
Again we have JM’s views but only comments from the BJ team. Labour would put up corporation tax to 26% but would re-introduce a small company’s rate of 21% (current rate is 19%). The best we can get from the Conservatives is a suggestion to drop corporation tax to 12.5% if we get a no deal BREXIT.
FINANCIAL TRANSACTIONS TAX (FTT) AND STAMP DUTY
At present we have Stamp Duty at .5% on most financial transactions. JM proposes a new FTT to “radically enlarge the scope of UK Stamp Duty”. SJ hasn’t yet commented.
From a financial planning perspective any tax of this kind would reduce the extent of active management of assets and depending upon it’s implementation would lead to a big increase in discretionary Fund management (DFM).
The conservative view is to increase the SDLT tax free threshold to £500,000 from the current £125,000 and not to change the current FTT rates.
Labour proposes a “radical” (they really like that word!) increase to the tax on property to replace Council tax. The new tax would be based on current values. Again no comments yet from the Conservatives.
INHERITANCE TAX (IHT)
We know the conservatives are considering the proposals of the office of tax simplification (basically tidying up). Labour on the other hand want to abolish IHT in favour of a lifetime gift tax with gifts above a lifetime rate of £125,000 being taxed at the recipients highest rates of income tax (which would be up to 50% under Labour).
A snap election may seem to boil down to whether or not you wish to leave the European Union. It would be wise for all electors to consider what happens after that decision is made. Clearly the better off are going to pay dearly for a change of colour in our government.