The Election result impact on UK Tax
During the somewhat politically turbulent past few months and the battle to win the leadership race, many bold tax pledges have been made. However, with the Conservative government now in place, it is expected that the majority of changes will be more modest.
A new Budget is now being predicted for early 2020 and summarized below are the main campaign proposals with regards to taxation.
Income Tax, National Insurance and VAT
The Tory manifesto promised no increases on Income Tax, National Insurance or VAT contributions.
A raise in the National Insurance contributions threshold to £9,500 in April 2020 is expected, with a goal to raise it to £12,500, in line with personal income tax allowances, at a later date.
Capital Gains Tax
It is predicted that the private residence relief rules and the 30 day payment rules for tax due on the sale of residential property will be tightened further.
Income Tax Higher Rate Threshold
One of Boris Johnson’s main tax policy’s during his campaign was to increase the income tax higher rate threshold to £80,000.
Stamp Duty Land Tax
The introduction of a 3% stamp duty land tax surcharge for non-residents purchasing UK residential property is anticipated.
The stamp duty land tax threshold may increase from £125,000 to £500,000.
A reduction in the top SDLT rate from 12% to 7% was suggested.
No major amends to the current inheritance tax regime were indicated, despite initial thoughts that this tax would be reviewed and potentially abolished altogether.
Whilst campaigning, Boris Johnson had suggested that the Conservatives may reduce the corporation tax rate to below 17%. However, this pledge was then postponed and a promise made to retain the current 19% rate.
The Conservative party manifesto stated that the employment allowance would be increased from £3,000 to £4,000.
Entrepreneurs relief is expected to be reviewed and reformed.
No major changes were proposed in relation to the non-domicile regime.
Tax Evasion and Avoidance Measures
New anti-tax avoidance and evasion laws will be introduced.
The maximum sentence for tax fraud will be doubled to 14 years.
HMRC will create a new anti-tax evasion unit.