The fourth article in our series looking at the key tax pledges from the various parties at the time of writing.
With less than one week to go until the General Election, campaigning from the main political parties has been ramped up. This week’s article will focus on some new tax pledges from the Scottish National Party (SNP) as well as a roundup of the key tax pledges from all parties.
The SNP this week launched their manifesto with a pledge not to support any increase in VAT, national insurance or any further reductions in corporation tax. The SNP support the reversal of the married couple’s allowance, the reversal of the reductions to the bank levy and the introduction of a tax on banker’s bonuses. Whilst income tax is devolved to Holyrood, the SNP have noted their support for an increase in the additional rate of income tax from 45 percent to 50 percent across the whole of the UK.
The SNP also want to double the employment allowance from £3,000 to £6,000. The increase in the employment allowance looks set to help smaller employers who would be paying a higher minimum wage under SNP plans to increase the minimum wage to the level of the ‘real Living Wage’.
As the pressure increases on all parties to gain the support of the voters the IFS have stated that the tax and spending plans of the Conservatives and Labour do not present an “honest set of choices”. The independent think-tank claim that Labour may not raise anything like the £48.6 billion claimed. The IFS also state that the Conservative’s promise to reduce net migration below 100,000 a year risks a £6 billion loss to the exchequer.
Below is a reminder of the key tax pledges from various parties.
A Conservative Government would increase the personal allowance to £12,500 and raise the 40 percent income tax threshold to £50,000 by 2020. Meanwhile the Liberal Democrats would add 1p on to the basic, higher and additional rates of income tax and the rate of dividend tax from 2018-19.
In contrast with this Labour would reduce the threshold for the 45 percent additional rate to £80,000 and introduce a new 50 percent income tax rate for those earning above £123,000. Labour have also pledged no increases in national insurance or income tax for those earning less than £80,000 a year.
As above, the SNP would also look to set a 50 percent rate across the UK but seemingly at the current additional rate threshold of £150,000.
On employment taxes Labour want to introduce a ‘fat cat’ excessive pay levy reportedly charged at 2.5 percent of earnings above £330,000 a year and 5 percent on earnings above £500,000. The Conservatives announced a one year employers’ national insurance holiday for employers hiring veterans, former wards of the care system, someone with a disability, those with chronic mental health and reformed criminals. Whilst the Liberal Democrats want to raise the employee national insurance contribution threshold to the income tax threshold.
Both the Conservatives and Labour have pledged not to increase VAT and UKIP have stated they would cut VAT on domestic fuel and hot takeaway food, if elected.
The Conservatives have promised to stick to the plan of reducing corporation tax to 17 percent by 2020, whilst the Liberal Democrats want the rate set at 20 percent and Labour a top rate of 26 percent as well as the implementation of a small profits rate at 21 percent. The SNP does not support any further reductions in corporation tax.
For a detailed guide on what the parties have been saying on tax throughout the campaign please check back on our previous three Tax Matters Digest articles:
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