The last of the major national party election manifestos has been published, with the appearance of the Conservative manifesto on 24 November. For those hoping for significant tax cuts based on earlier winks and nudges from Conservative grandees, the manifesto commitments may prove a little disappointing.
In fact, despite its repeated promises to deliver a 'low-tax economy', the programme set out in the manifesto would actually change very little in the area of personal taxation, in contrast to the significant shake-up pledged by Labour (and, to a lesser extent, the Liberal Democrats).
The Conservatives' headline pledge is a promise not to increase the rates of income tax, national insurance or VAT. Such a freeze is likely to prove attractive to higher earners when compared with Labour's promise to implement a new 50% rate of income tax on earnings over £125,000 and lower the threshold at which the current additional rate is paid to £80,000. In addition to this, the Conservatives promise to raise the national insurance ('NI') threshold to £9,500 next year, with the goal eventually to raise it to £12,500. The current primary NI threshold is already £8,632, so this first increase in the threshold will lead to a modest initial saving for affected taxpayers of around £100.
On capital gains tax, no promises are made either to freeze the rates or lower them. It is here that we see the most acute contrast between the Conservative and Labour manifestos, the latter of which promises to tax capital gains as if they were income, leading to a possible top rate of tax on capital gains of 50%. However, capital gains are not completely in the clear in the Conservatives' plan. The party promises to 'review and reform entrepreneur's relief'. This relief currently applies, very broadly, to disposals of certain assets, such as shares or securities in a company, by individuals working in that business (subject to certain timing and other conditions). An individual can use this relief to reduce the rate of capital gains tax paid on a qualifying disposal to 10%, subject to a lifetime limit of £10 million. Any future reform of the relief may mean that it becomes harder for some taxpayers to obtain it.
In common with similar pledges by Labour and the Liberal Democrats, the Conservative manifesto promises to introduce an SDLT...