Johnson sets out his vision for post-Brexit Britain
Boris Johnson pledged an extra 50,000 NHS nurses, thousands of doctors and primary care staff and to restore a nurse bursary in his manifesto launch yesterday. Central to Mr Johnson’s manifesto was his commitment to “get Brexit done” in order to move the country forward. He contrasted his “sensible, tax-cutting One Nation Conservative Government” with “the Friday 13th horror show if the Corbyn-Sturgeon coalition of chaos is triumphant”. The PM pledged not to raise the rates of income tax, national insurance or VAT – a “triple tax lock” – and promised a £10bn plan to raise the national insurance contributions threshold for working people. Mr Johnson acknowledged that the Tories were “not prioritising tax cuts for high earners at the moment” and the manifesto did not include a previous promise to cut stamp duty. The Conservative Party’s manifesto also pledges to increase the R&D tax credit rate from 12% to 13% and initiate “the fastest-ever increase in domestic public R&D spending, including in basic science research”.
Labour manifesto details tax plans
Labour has unveiled its election manifesto, confirming plans for tax reform. If elected, the party plans to increase income tax on high earners, with those earning more than £80,000 a year to pay 45% on their income – a rate currently applicable to those earning £150,000 or more. Those earning more than £125,000 a year will face a new “super-rich” rate of 50%. Labour forecasts that the mooted income tax changes will raise £5.4bn per year. The party will also deliver a change for capital gains tax, bringing it in line with income tax. Meanwhile, corporation tax would rise from 19% to 26%, with a 21% rate for smaller firms. The manifesto also shows that the family home allowance would be stripped out of inheritance tax and the marriage tax allowance will be scrapped. Labour would also launch a review into business rates and look at a “land value tax” on commercial landlords, while fee-paying schools will lose their VAT exemption.
Javid pledges to cut taxes at every single Budget
The Chancellor has warned that Labour would need to introduce six new taxes and impose rises on six existing taxes to pay for a “spending black hole” in the party’s manifesto costings. Speaking at an event in Bolton, Sajid Javid predicted that the UK would be in crisis “in days and weeks” if Jeremy Corbyn got into power with the “pound crashing in the early hours of the morning” and “foreign investors rushing their money out of the country”. Working people would have to pay £2,400 each to fill a £385bn black hole in Jeremy Corbyn’s spending plans, Mr Javid claimed. He added: “Unless they find that magic money tree in the next couple of weeks, they’re going to bring in the biggest tax hike of modern times.” Mr Javid pledged that the Conservatives will increase the national insurance threshold to £9,500 in his first budget and work towards a £12,500 “when we can afford it.”
Source: The Daily Telegraph (27/11/2019)
Business warns Labour’s reforms will wreck the economy
The Labour party’s tax plans have come under fire from the business community which says measures such as hiking corporation tax and dividend tax rates would stymie innovation and hurt the economy. The City UK says a new financial transactions tax would be “bad for business, bad for investors, bad for savers, and bad for the economy” while the Federation of Small Businesses said Jeremy Corbyn had broken a promise not to raise the small business corporation tax rate. Mike Cherry, national chairman of the FSB, said that “a small business owner making £40,000 could face thousands of pounds more in tax.” The FT cites IFS analysis which suggests Labour’s election manifesto would create the harshest tax regime on business income among the G7 but adds that if Labour’s inclusive ownership fund plan is included another 10% can be added to the corporate tax rate, making it effectively higher than any other country in the OECD.
Taxman extends MTD deadline
HMRC has given some small firms an extra year to comply with Making Tax Digital (MTD). The policy, introduced in April, sees self-employed people and business owners with a turnover above the £85,000 VAT threshold filing their returns online using specialised software. HMRC had said it would not issue any fines to businesses filing late in the 2019/20 tax year unless they were deliberately avoiding the new rules. It has added a concession which will give businesses with complex or legacy IT systems until April or October 2020, depending their filing deadline, to make their first submission. A spokesman said: “HMRC allowed all MTD businesses a one-year soft-landing period to put digital links in place,” adding that ongoing engagement with businesses and stakeholders has prompted it to offer a process to apply for additional time.
Source: The Daily Telegraph (22/11/2019)
Government borrowing hits five year high
Government borrowing hit £11.2bn in October, the Office for National Statistics (ONS) has said, £2.3bn more than in October 2018. The total is well above economists’ predictions of £9.3bn and represents the highest level in five years. Over the financial year so far borrowing has reached £46.3bn, a 10.3% increase on the same period last year. Debt climbed by £32.1bn to £1,798.5bn, or 80.4% of GDP, double the 40% ratio before the 2008 financial crisis. Central government borrowed £7.6bn and local governments added another £1bn, while the Bank of England borrowed £2.5bn and £100m was borrowed to cover pension costs.
Source: The Times (22/11/2019)
Number arrested for tax evasion falls
Arrests for suspected tax evasion fell by 11% this year, with 782 arrests made in the 12 months to March 2019, compared with 877 a year earlier. In 2015-16, 1,072 people were arrested. Adam Craggs, partner at RPC, said that there had been some criticism of the taxman for being too “trigger happy” in the past, and added: “Fewer arrests could be a sign that HMRC is now exercising its powers of arrest more responsibly and in accordance with the law.”
Source: The Times (25/11/2019)