Election Fever causing Tax Headaches? Read our Election Guide for Tax & Estate Planning
With the general election nearing and a possible change of government on the horizon, we understand that it is an uncertain time for private clients and tax practitioners alike.
Discussions around tax have featured prominently in the build up to this election, and so we have set out the below guide to the proposed tax changes set out in each of the manifestos of the major political parties in the hope of providing some clarity around any potential changes relating to tax and estate planning for individuals and business owners.
The manifestos of the major political parties go into varying detail on the proposed tax regimes (including any proposed changes); we have summarised the key provisions below.
Conservatives
Individuals
- No raise in Capital Gains Tax.
- Maintain Private Residence Relief so that people’s homes are protected from Capital Gains Tax.
- Introduction of a two-year temporary Capital Gains Tax Relief for landlords who sell to their existing tenants.
- No increase to current rates of Stamp Duty Land Tax.
- No raise to current rates of Income Tax or VAT.
Businesses
- No raise in Corporation Tax. Current Minimum is 19% for companies who generate profits of under £50,000. The next threshold is 25% for companies who generate £250,000 in profits.
Pensions
- Cut Tax for pensioners with the new Triple Lock Plus. This guarantees that both the State Pension and the tax free allowance for pensioners always rise with the inflation, earnings or 2.5% (whichever is highest). This is designed to ensure that the new state pension doesn’t get dragged into income tax.
- Pension tax guarantee to ensure that no new taxes to be implemented on Pensions.
Labour
Individuals
- No increase to taxes on working people – This means no increase on National Insurance, the basic, higher, or additional rates of Income Tax, or VAT.
Trusts/Estates
- End the use of offshore trusts as a means of avoiding inheritance tax – This is designed to ensure that everyone who makes their home the UK their home pays UK Inheritance tax.
Businesses
- Cap Corporation Tax at the current level of 25%.
Liberal Democrats
Liberal Democrats Manifesto 2024
Individuals
- Cutting Income Tax by raising the tax-free personal allowance.
- Reforming Capital Gains Tax regime – aimed to close loopholes exploited by the super wealthy.
- Abolishing the Bedroom Tax for people living in social housing with spare bedroom.
- Abolishing residential leaseholds and capping ground rents to a nominal fee.
- End retrospective tax changes such as the loan charge, and review the Government’s off-payroll working IR35 reforms – aimed to ensure fair treatment for self-employed people.
Businesses
- Increasing global minimum rate of corporation tax to 21%. Current Minimum is 19% for companies who generate profits of under £50,000. The next threshold is 25% for companies who generate £250,000 in profits.
- Introducing a 4% tax on the share buyback schemes of FTSE-100 listed companies – aimed to incentivise productive investment, job creation and economic growth.
Green Party
Individuals
- Introduction of a Wealth Tax of 1% annually on assets above £10 million and of 2% on assets above £1bn.
- Reform of Capital Gains Tax (CGT) to align the rates paid by taxpayers on income and taxable gains.
- Aligning the tax rates on investment income with the tax and National Insurance Contribution rates on employment income.
- Abolish the Upper Earnings Limit that restricts the amount of National Insurance paid by high earners.
Reform UK
Individuals
- Lift the Income Tax starting point to £20,000 per year (currently £12,570 pa).
- Introduce a 25% transferable marriage income tax allowance. This would mean no tax on the first £25,000 of income for either spouse. (Based on higher income tax starting point of £20,000 per person).
Trusts/Estates
- Abolish Inheritance Tax for all estates under £2m.
Businesses
- Lift the minimum profit threshold to £100,000 per annum (currently £50,000).
- Reduce Main Corporation Tax Rate from 25% to 20%, then to 15% from year 5.
- Cut entrepreneur’s tax relief to 5%.
This blog was co-authored by Ben Mather and Oliver Ivey.
Talk to us
The Wills, Trusts and Estate Planning Department at JMW Solicitors advise on a range of estate and succession planning matters including; inheritance tax efficient Wills; Trusts or corporate structures to mitigate inheritance tax; inheritance tax for individuals who reside or own assets abroad; and other general IHT planning. If you would like to speak to one of our specialist solicitors, then please get in touch on the details below to arrange a free initial consultation. You can contact the team by calling 0345 872 6666 or by completing our online enquiry form.
