We have set out some topical tax points you may like to consider during the 2018/19 tax year to ensure that you are minimising your tax…
Polling doesn’t exactly suggest that the Lib Dem proposals are going to form a programme for majority government, but nonetheless it is interesting to see areas of overlap with other parties, who they might be able to influence in a hung parliament.
Income tax: the headline policy is the tried and tested ‘penny on income tax for the NHS’. This applies at all levels so rates would move to 21% basic rate, 41% higher rate and 46% additional rate at the existing thresholds.
Also aspirational language about taxing income from wealth “more fairly, compared to income from work” but this doesn’t seem to go further than combining capital gains tax annual exemption into a single personal allowance – so large rate disparity vs income tax. Entrepreneurs’ relief not in scope.
Finally on income tax, agreeing with Labour on scrapping the marriage allowance (some have argued this was mainly introduced as a fairly low cost bear trap for further election campaigns, if so it seems Labour and Liberal Democrats are now both happy to jump in).
Corporation tax: a straightforward increase in corporation tax to 20%. No details on timing, so assume this would be immediate; no proposals for a separate small profits rate. So marginally lower rate than Labour for small companies and marginally higher than Tories.
Balance of tax-derived funding: is made up from an increase in air passenger duty (APD) for more frequent flyers and the tripling digital services tax to 6%. Can’t see much detail on how APD changes would work but designed to increase the cost for those flying more than four times a year.
Anti-avoidance: naturally there is additional tax revenue from improving anti-avoidance. Savings have been priced at £5.7bn against Labour’s proposed £6.2bn. It is unlikely that either number is very scientific, but maybe the difference is cost of the Lib Dem promise to scrap ‘loan charge’ and review IR35 changes…?
Additional tax raising policy: to finish, there’s also some revenue from legalised cannabis duty.
Costings: the detail for all is here: https://bit.ly/2OjTch2
Takeaway points: perhaps the most interesting element is that the manifesto promises increased spending of £64bn by 2024/25 against Labour’s £83bn by 2023/24. Lots of nuance to that of course, but headline figures make it look like ‘credible’ increased spending is only show in town this election.
As a comparison Labour’s extra £83bn is almost entirely funded by new taxation; the Lib Dems meet quite a bit of their £64bn through some other spending cuts and ‘Remain bonus’ (though presumably any remain bonus could be available to a Labour government depending on the result of the confirmatory referendum).