A recent article in The Times highlighted at least one of the main political parties has come out and said it will look to make major changes to taxation if it wins the election.
Under the heading “Lib Dem’s plot raids on the rich” it states “The Liberal Democrats are planning a raid on the wealthy after the next election that will mean a huge expansion of capital gains tax, and a fresh assault on pensions and a widening of inheritance tax.
New wealth taxes form the backbone of the proposals drawn up by the party’s main policymaking body and are due to feature in its manifesto for the 2015 general election.
They come on top of the Lib Dem plan for a mansion tax, which is likely to be a “red line” for the party during any negotiations to form another coalition government. Labour has already adopted the mansion tax plan, which would involve a 1 per cent charge placed on a property’s value above £2 million.
Nick Clegg’s party is also examining a proposal to restore the 50p top rate of tax, cut to 45p last year at the insistence of the Conservatives.
The tax measures were set out in documents published by the party’s Federal Policy Committee. Under the plans, capital gains tax (CGT), set at 28 per cent for high earners, would increase sharply. The Lib Dems want CGT to be paid at the same rate as income tax — 40 per cent for those earning more than about £41,000 and 45 per cent for those earning more than £150,000.
The “excessively generous” tax relief on pension contributions will also be slashed under the plan. High earners will be allowed to invest £1 million tax free in a pension, down from £1.25 million.
Anyone hoping to avoid inheritance tax by giving away their estate over several years is also hit. The time period for which lifetime transfers of wealth are “within the scope of inheritance tax” will be extended from seven to 15 years.
A source close to Mr Clegg said the package showed that the Lib Dems were a “party with the most creative and progressive approach” to taxation. “Under Nick Clegg’s leadership, the party has focused on the old liberal principle of favouring taxation on unearned wealth over hard work.”
A renewed assault on “non-dom” taxpayers is also in the Lib Dem plans. Those who declare themselves as non-domiciled in the UK for tax purposes are charged £30,000 a year. The Lib Dems propose to increase that to £50,000 a year, eventually rising to £75,000. Other proposals are to hand the tax authorities more powers to name tax evaders.
“We believe that in order to make the tax system fairer and encourage employment and economic growth, UK taxation needs to be rebalanced towards increased taxation of wealth and lower taxes on earned income,” the tax paper says.”
In light of these types of articles, it is clear any planning should be undertaken sooner rather than later, as it may not always be available.
For more advice or information contact John Elliot.
