Insights

What will the UK 2017 election mean for personal taxation?

  • Written By: Cherry Reynard
  • Published: Tue, 30 May 2017 09:33 GMT

A summary of the parties' main proposals outlined in 2017 election manifestos relating to personal taxation. This includes an overview of key party promises on inheritance tax, income tax, national insurance contributions and self-employment rights.

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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 working families
  • Increase the personal allowance to £12,500 by 2020
  • Increase the higher rate band to £50,000 from 2020 
  • Continue with the fiscal rules announced by the chancellor in the 2016 autumn statement
Other measures
  • Means-test winter fuel payments
  • Promote long-term savings and pensions products, including the Lifetime ISA
  • Ensure that interests of employees on traditional contracts, the self-employed and those people working in the ‘gig’ economy are all properly protected

Labour

Key tax policies
  • Increase income tax for the top 5% of earners to help fund public services
  • Lower the threshold for the 45p additional rate to £80,000
  • Reintroduce the 50p rate on earnings above £123,000
  • Guarantee no rises in income tax for those earning below £80,000 a year
  • Guarantee no increases in personal NICs
Other measures
  • Reverse tax giveaways on CGT and IHT
  • Scrap the married persons’ tax allowance
  • Clamp down on bogus self-employment, this includes:
    – Assume a worker is an employee unless the employer can prove otherwise
    – Ban umbrella companies which create a false structure to limit employers’ tax liabilities and limit workers’ rights
  • Set up a dedicated commission to modernise the law around employment status
  • Increase the tax on private medical insurance premiums
  • Guarantee winter fuel allowance as universal benefit
  • Abolish the bedroom tax
  • Initiate a review into reforming council tax

Liberal Democrats

Key tax policies
  • Ensure those with the highest income and wealth are making a fair contribution
  • Increase immediately basic, higher and additional rates of income tax by 1%
  • Raise the employee NI threshold to the income tax threshold, while protecting low earners’ ability to accrue pension and benefit entitlements
  • Reform CGT and dividend tax relief
  • Refocus entrepreneurs’ relief
  • Reverse a number of the Conservatives’ unfair and unjustified tax cuts including:
    – Reverse CGT cuts and CGT extended relief
    – Reverse the marriage allowance and the raising of the IHT threshold
  • Establish a review to consider the introduction of a single rate of tax relief for pension contributions, which would be designed to be simpler and fairer and set more generously than the current 20% basic rate relief
Other measures
  • Commission the development of a dedicated health and care tax, to replace the 1% income tax rise, possibly based on a reform of NICs
  • Modernise employment rights to make them fit for the age of the ‘gig’ economy
  • Scrap the bedroom tax
  • Ensure pensioners who pay tax at the higher rate of 40% are not eligible for the winter fuel payment
  • Introduce a legal regulated market for cannabis - this would raise the amount of tax collected by the government
  • Enable local authorities to levy up to 200% council tax on second homes and ‘buy to leave empty’ investments from overseas
  • Remove the requirement to hold local referenda for council tax changes

SNP

Key tax policies
  • Reintroduce the 50% additional rate of tax across the whole UK from 2018/19
  • Back a review for a fairer pension system
  • Freeze National Insurance contributions 
Other measures
  • Reverse the married couples allowance 
  • Abolish the bedroom tax
  • Call for an end to Tory gimmicks like the Lifetime ISA, which can disincentivise other forms of retirement savings that offer a greater return

UKIP

Key tax policies
  • Raise the personal allowance to £13,500 by the next parliament 
  • Raise the 40 percent income tax threshold to £55,000 
  • When the economic conditions allow, restore the personal allowance to those earning over £100,000. 
  • Raise the inheritance tax threshold to £500,000, per individual, transferable for a married couple or those in civil partnerships, so up to £1,000,000 in total. Eventually eliminating inheritance tax altogether. 
Other measures
  • Introduce a flexible state pension window
  • Abolish the bedroom tax
  • Maintain all pensioner benefits and the pensions Triple Lock.
  • No quarterly returns (potentially for Making Tax Digital) and no increase in Class 4 National Insurance Contributions

Green

Key tax policies
  • Include a wealth tax on the top 1% of earners
  • Ensure inheritance is taxed according to the wealth of the recipient
  • Support a higher rate of income tax
Other measures
  • Abolish the bedroom tax
  • Axe buy-to-let tax breaks

Plaid Cymru

Key tax policies
  • Re-introduce the 50p income tax rate for those earning over £150,000
  • Increase the level at which NICs are paid to the same level as income tax by the end of parliament
Other measures
  • Abolish the bedroom tax
  • Devolve powers over Social Security to Wales
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