Insights

What will the UK 2017 election mean for business tax?

  • Written By: Cherry Reynard
  • Published: Tue, 30 May 2017 08:33 GMT

A summary of the parties’ main proposals outlined in the 2017 election manifestos relating to the taxation of businesses.

organising and task delegation

Our summary is based on information available and analysed up to 30 May 2017. Please note we have imported terms and words from the manifestos and the economics of the proposals have not been assessed.

DISCLAIMER
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of publication.

Conservatives

Key tax policies
  • Reduce taxes on Britain’s businesses
  • Reduce corporation tax to 17% by 2020, the lowest rate of any developed economy
  • No increase in the level of VAT
  • Continue to support small businesses through business rate relief and low tax
  • Continue with the fiscal rules announced by the chancellor in the 2016 autumn statement
National
  • Identify the industries that are of strategic value to our economy and support and promote them through policies including tax
  • Help digital companies – help innovators and start-ups by encouraging early stage investment and considering further incentives under EIS and Seed EIS
  • Seek to build upon the favourable tax arrangements that have helped creative companies, including the creative industries tax credits scheme
  • Introduce a one year holiday on employers’ NIC for firms hiring service personnel after they leave service
  • Introduce a one year holiday on employers’ NIC for businesses employing former wards of the care system, someone with a disability, those with chronic mental health problems, those who have committed a crime but repaid their debt to society and those who have been unemployed for over a year
  • Update the rules that govern mergers and takeovers, to ensure that overseas investment is not driven by aggressive asset-stripping or tax avoidance
  • Require companies to explain pay policies better, particularly complex incentive schemes
  • Commission an examination of the use of share buybacks
  • Promote R&D investment to meet the current OECD average of 2.4% of GDP within ten years, with a longer-term goal of 3% - it is unclear whether this relates to R&D tax credit regime changes
  •  Keep open option of changing the tax status of independent schools if sufficient progress is not made in involving independent schools with academy sponsorship or the founding of free schools in the state system
International
  • Be a global nation that is competitive, outward-looking and open for business – the best country in Europe for doing business
Regional
  • Ensure local residents can veto high increases in council tax via a referendum
  • Continue to support businesses most affected by the recent revaluation of business rates
  • Make longer term reforms to the business rates system to address concerns about the way it works
  • Make sure that revaluations are conducted more frequently to avoid large changes in expected bills
  • Explore the introduction of self-assessments in the valuation process
  • Conduct a full review of the business rates system to ensure it is sustainable for the future
Other measures
  • Ensure a greater percentage of tax revenues from shale gas directly benefit the communities that host the extraction sites

Labour

Key tax policies
  • Increase the main rate of corporation tax to 21% from 2018/19, 24% from 2019/20 and 26% from 2020/21
  • Reintroduce the lower small profits (below £300,000) rate of corporation tax at 20% from 2018/19 and 21% from 2020/21
  • No increase in VAT rates
  • Introduce an excessive pay levy on companies with staff on over £330,000
National
  • Exclude small businesses with a turnover of under £85,000 from quarterly reporting [presumably under Making Tax Digital]
  • Extend stamp duty reserve tax to include derivatives and remove the intermediaries exemption
  • Close the ‘Mayfair Tax’ loophole used by private equity fund managers to reduce income tax liabilities
  • Reverse tax giveaways on the bank levy
  • Implement the soft drinks industry levy, known as ‘sugar tax’
  • Initiate an immediate independent review of the efficiency, range and scope of business tax reliefs
  • Renew pledge not to extend VAT to food, children’s clothes, books and newspapers and public transport fares
  • Remove the VAT exemption on private school fees
  • Maintain the employers apprenticeship levy
  • Scrap the Conservative’s plans for schools to pay the apprenticeship levy
International
  • Review and reform the CFC system to close the scope for tax avoidance
  • Introduce full country-by-country reporting across international tax jurisdictions
  • Close the Eurobond loophole that allows securities listed on the Channel Island Stock Exchange to enjoy exemptions from withholding tax
  • Investigate the use of advanced thin capitalisation agreements used by large, multi-group companies to significantly reduce their tax liabilities
Regional
  • Review the entire business rates system in the longer run and introduce a package of reforms to business rates including:Switch from RPI to CPI indexation
  • Exempt new investment in plant and machinery from valuations
  • Ensure businesses have access to a proper appeals process
  • Review extending the £1,000 pub relief business rates scheme to small music venues
  • Consider new options such as a land value tax

Liberal Democrats

Key tax policies
  • Reverse existing plans to cut corporation tax from 20% to 17%
  • Create a new ‘start up allowance’ to help those starting up a new business with their living costs in the crucial first weeks of their business
  • Take tough action against corporate tax evasion and avoidance 
National
  • Reform corporation tax to develop a system that benefits the smallest companies while ensuring the biggest multinationals cannot avoid paying sums comparable to nationally-based competitors
  • Consult on moving from a profits-based tax to one that takes account of a wider range of economic activity indicators, such as sales and turnover
  • Review business rates to reduce burdens on smaller businesses, while prioritising reforms that recognise the development of the digital economy
  • Encourage employers to promote employee ownership by giving staff in listed companies with over 250 employees a right to request shares, to be held in trust for the benefit of employees
  • End the anomaly that forces Police Scotland and the Scottish Fire and Rescue Service to pay VAT on their purchases
International
  • Lead international action to ensure global companies pay fair taxes in the developing countries in which they operate, including tightening anti-tax haven rules
  • Require large companies to publish their tax payments and profits for each country in which they operate
Regional
  • Consider the implementation of land value taxation
Other measures
  • Reform vehicle taxation to encourage sales of electric and low-emission vehicles and develop electric vehicle infrastructure
  • Establish a coherent tax and regulatory framework for landfill, incineration and waste collection, including reinstating the landfill tax escalator and extending it to the lower rate and consulting on the introduction of an incineration tax
  • Close loopholes in the sugary drinks tax
  • Introduce a levy on tobacco companies

SNP

Key tax policies
  • Not support further reductions in corporation tax
  • Introduce a tax on bankers’ bonuses
  • Support the reversal of the reductions to the bank levy
  • Press to phase the introduction of the quarterly digital tax reporting over a five-year transition period and consider exemptions to those who are not incorporated or VAT-registered
  • Extend the annual investment allowance from the current £200,000 per year to £1m a year
  • Back reduced employers’ NIC by doubling the employment allowance
  • Back a freeze on other National Insurance contributions and VAT
Other measures
  • Support examining a reduction in VAT for the hospitality sector
  • Continue to make the case to the UK government to extend a VAT exemption to Scottish emergency services
  • Remain committed to a Treasury review of alcohol taxation to better reflect alcohol content
  • Secure an exemption from air passenger taxes on highlands and islands flights
  • Call for a freeze in further insurance premium tax hikes
  • Close the loopholes in the sugary drinks tax
  • Back the continuation of VAT-exemption on essential items like children’s clothes
  • Hold the UK government to a commitment to remove VAT from sanitary products
  • Work to ensure appropriate action is taken on the taxation of late life oil and gas assets

UKIP

Key tax policies
  • End the unfairness under which some large companies pay zero or negligible corporation tax.
  • Cutting business rates for small businesses
  • To reduce household bills, removing VAT from domestic fuel and scrapping ‘green’ levies
Other measures
  • Freeze insurance premium tax

Green

Key tax policies
  • Reinstate the higher level of corporation tax for large businesses
  • Introduce a ‘Robin Hood’ tax on high value transactions on the finance sector
  • Phase in the abolition of the cap on employee’s national insurance
Other measures
  • Support and promote small businesses
  • Support start-ups and creative enterprises through community credit and green investment
  • Introduce a tax on superstar performances
  • Introduce tax incentives for employers who provide support facilities at the workplace such as childcare, job-sharing and flexible working
  • Remove VAT from sanitary products
  • Trial a land value tax
Green taxes
  • Increase vehicle excise duty on new diesel vehicles
  • Phase out fossil fuel subsidies
  • Reform tax relief for smaller-scale projects to democratise energy ownership
  • Introduce Green ISAs
  • Promote Green Bonds by allowing tax-free bonds for green projects and issuing government backed Green Bonds

Plaid Cymru

Key tax policies
  • Cut VAT for the tourism industry to put Wales ahead in the international tourism market
  • Introduce a targeted tax discount for new and existing businesses in Wales as a central part of the new UK Regional Policy
  • Transfer control over corporation tax arising in Wales to Wales
Other measures
  • Introduce a fuel duty regulator to stop rising fuel costs
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