Each Party has now launched its manifesto for the General Election come June 8th this year. Speedy took a look at some what Contractors might find relevant when deciding who to vote for.
Limited company tax and dividends
Labour says that for companies with annual profits below £300,000, they would “reintroduce the lower small profits rate of corporation tax.” According an analysis by the IFS, the party’s pledge would result in a small profits rate of 20% in 2018–19, rising to 21% in 2020–21.
The Lib Dems say the cuts in corporation tax from 20% to 17% would be reversed. The Lib Dems would also introduce a commensurate 1p increase in dividend taxation. t is not clear whether this 1p increase is what the party means by pledging ‘reform to dividend tax relief.’
The Conservatives will stick to the trajectory already set for corporation tax; falling to 17% by 2020. Their manifesto omits any mention of the announced cut in the dividend tax allowance, but officials’ comments at the time of the Finance Bill passing suggest it is still going ahead.
VAT and other taxes
The Conservatives pledge to not make any increases to VAT. The party will also keep its promise of increasing the personal tax-free allowance to £12,500 and the higher rate to £50,000. The Tory manifesto is conspicuously silent about National Insurance Contributions. The party is re-pledging to be one of ‘low taxes,’ and says it wants to simply the tax system.
Lib Dems will refocus Entrepreneurs’ Relief, as part of a reversal package for four Tory tax policies — CGT cuts; extended CGT relief, the Marriage Allowance and the raising of the IHT threshold. The Liberal Democrats also want to reform the corporation tax system so it “benefits the smallest companies”. The focus on the currently profit-based tax will shift so that it takes account of sales and turnover.
Labour pledge to not make any increases to VAT or National Insurance Contributions. The party will raise taxes for anyone earning over £80,000 a year by setting a 45p rate. And a 50p tax rate would apply to those earning over £123,000.
The Lib Dems would get employers to use ‘name-blind’ recruitment “to make it easier for customers and investors to exercise choice and influence.”
A Tim Farron-led government would also modernise employment rights to make them fit for the age of the ‘gig’ economy. The Lib Dems would look to build on the forthcoming Taylor report.
In its manifesto, Labour says it will ban umbrella companies.
A Jeremy Corbyn-led government would also set up a “dedicated commission” to modernise the law around employment status. Also in terms of status, legislation would change to assume a worker is an employee unless the employer can prove otherwise. Agencies and end-user would be jointly responsible for enforcing agency workers’ rights. And a statutory definition of employment status would be introduced (as contracting body IPSE has called for).
The Conservatives would support the public sector by providing seed funding for schemes to recruit older professionals from other sectors, including those returning to the workplace.