This blog entry seeks to cut through the spin to analyse each of the major parties’ policy positions on tax:
|Labour Party||Liberal Democrats
|Income Tax||No change.||Increase personal allowance to £10,000.||Make up to £750 of personal allowance transferrable between adults who are married or in a civil partnership – but only if the higher earning partner is a basic-rate taxpayer.|
|National Insurance||In 2011, implement 1% increase for people earning above £20,000.||Scrap 1% increase, but only if sufficient funds in place to do so.||Scrap increase for people earning £20,000-£35,000. Exempt all businesses that start up within two years of the election from paying NICs for the first 10 employees they hire in the first year after start up.|
New Toddler Tax Credit of £4 a week from 2012.
|Remove child tax credits from “richer families” and end the child trust fund.||Stop tax credits to families with incomes over £50,000.|
|VAT||No extension of VAT to children’s clothes, food, newspapers, books, or public transport.||No promises on VAT rates. Hike to 20% possible, including to children’s clothes, food, newspapers, books, and public transport.||No promises on VAT rates. Hike to 20% possible, including to children’s clothes, food, newspapers, books, and public transport.|
|Corporation Tax||No change, apart from clamping down on tax avoidance.||No change, apart from clamping down on tax avoidance.||Cut the main rate from 28p to 25p and the small companies’ rate from 22p to 20p.|
|Capital Gains Tax (CGT)||No change.||Tax capital gains as income (i.e., at 20%, 40%, & 50% rates, rather than flat 18% rate) and reduce the annual exemption from £10,100 to £2,000.||No change.|
|Stamp Duty||Two year increase in stamp duty threshold to £250,000 for first-time buyers, paid for by 1% increase on homes worth more than £1million.||No change from policy already announced by Government.||Permanently increase stamp duty threshold to £250,000.|
|Council tax||No council tax revaluation during next Parliament.||1% annual levy on the value of properties over £2million (to correct council tax anomaly where a £750,000 house is taxed at the same rate as one worth 10 times that amount). And potentially replace council tax with local income taxes.||Two year freeze on council tax increases.
Give local residents the power to veto high council tax rises, like in California.
|Inheritance Tax (IHT)||Freeze IHT threshold at £325,000 for next four years.||No change from policy already announced by Government.||Raise individual IHT threshold to £1 million, but no commitment to retain spousal exemption or to continue allowing spouses to transfer allowance to one another.|
|Pension tax relief||End relief for top rate (50%) taxpayers earning above £150,000.||End relief for higher rate (40%) taxpayers earning above £37,400.||
Rather vague commitment to “reverse effects of the abolition of the dividend tax credit for pension funds.”
|Environment||Tax rebates for electric cars and wind turbines.||Replace ‘Air Passenger Duty’ with an ‘Aviation Duty’ (i.e., to tax the planes as opposed to passengers) and extend duty to domestic flights where land travel is possible in under six hours.||No change.|
|Banks||50% tax on bank bonuses over £25,000 in 2010 appears to be a one-off.||Annual 10% tax on profits of UK banks.||Commitment to annual “bank tax” announced but no details provided.|
- Election 2010: Comparison Of Parties’ Policies On Family Law
- Election 2010: Side-By-Side Comparison Of Immigration Policies
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