This week, the electorate will go to the polls for the third time in four years. With spending likely to increase regardless of which party wins the race to Number 10, little attention has been paid to how it will be funded.
If Jeremy Corbyn wins general election 2019 this Thursday, radical tax overhauls are likely to be announced by his Labour party after Christmas. If Conservative leader Boris Johnson heads up the next government, former chancellor Sajid Javid will probably deliver a Budget speech he’s already penned. And if Liberal Democrats leader Jo Swinson defies the odds to show she can do a better job than Johnson or Corbyn, Article 50 will be revoked and fairer taxes are promised.
As ever, the devil is in the detail and whoever wins the election on 12 December 2019 faces a race against time to implement their tax changes for 2020/21. We take a look at three of the key tax policies from the Tory, Labour and Lib Dem manifestos that could affect your personal or business finances.
Johnson’s promise to raise the higher-rate threshold for income tax from £50,000 to £80,000 for 2020/21 has proved to be hot air.
Instead, the current income tax rates look set to be frozen in 2020/21 if the Tories emerge victorious, while there was no mention of the personal allowance.
The steady-as-she-goes manifesto does, however, suggest raising the national insurance threshold to £9,500 – but not in time for April 2020.
Those earning more than £80,000 a year face the prospect of paying 5% more in income tax, while the tax rate above this threshold would rise from 40% to 45%.
Meanwhile, individuals earning more than £125,000 a year would pay a new rate of 50%.
The Institute for Fiscal Studies claimed the move will cost people earning between £100,000 and £150,000 a year between £1,000 and £5,375, while raising £3 billion.
Buried in the manifesto is the Lib Dems’ plan to raise all income tax rates by 1%, aiming to raise £7bn which would be ringfenced for the NHS and social care.
They also plan to scrap the marriage allowance and the controversial loan charge that applies to 50,000 people paid through disguised remuneration schemes.
Capital gains tax
No mention of capital gains tax was included in the Tory manifesto, suggesting the existing rates and thresholds will remain.
Entrepreneurs’ relief, however, is in line to be reviewed ahead of potential reform.
Currently, capital gains made on the sale of buy-to-let properties are added to the owner’s other income.
Any part in the basic-rate band is taxed at 18%, while higher and additional-rate taxpayers pay 28%.
Labour plan to bring these capital gains tax rates in line with the rates of income tax, which are also in line for an overhaul.
The plan is to abolish the existing capital gains tax allowance and tax gains alongside income through the creation of a new single allowance.
In 2019/20, the capital gains tax allowance stands at £12,000 and the personal allowance at £12,500. No threshold figure was put on a new merged allowance.
Johnson has already confirmed the main rate of corporation tax will not reduce from 19% to 17% on 1 April 2020 as planned.
While that plan is on ice, the manifesto pledges to increase research and development tax credits from 12% to 13%.
A pledge to raise the main rate of corporation tax – from 19% to 26% – will be phased in over the next three years.
Tax reliefs and incentives currently in place to reduce corporation tax bills for innovative businesses in research and development also face the axe.
A plan to return the main rate of corporation tax back to its 2016 level of 20% is in place, which would still be one of the lowest rates in the world.