Both Conservatives and Liberal Democrats had well-developed tax programmes in
their manifestos. Blending them together won’t be easy.
It seems the Lib Dem flagship rise to a £10,000 personal allowance will go
through in stages – but the prospect of paying for it with CGT & Air
Passenger Duty rises, restricting pensions tax relief to basic rate, plus a good
deal of closing of anti-avoidance/gap-closing doesn’t sound like a Tory Budget.
CGT on non-business assets (remember taper relief definitions!?) will shoot
up, but surely not totally in line with income tax without some inflation
relief? Both see non-doms – and banks – as a source of more tax but in different
There will be some tightening of tax credits for those on higher incomes but
one wonders if the impact of higher personal allowances on general benefits is
fully appreciated ( Click
to read more from the Low Incomes Tax Reform Group).
Business tax measures do seem easier to blend – the Conservatives want to
recast the corporation tax system and achieve lower tax rates combined with a
more territorial approach. That doesn’t conflict with the main Lib Dem aims of
further challenging the use of tax havens and introducing a GAAR.
Agreement on NICs does seem to have been hammered out already – no NIC rises
for employers but the employee/self employed increases in rates will go
ahead…though whether the Conservatives’ ideas on altering the impact of NICs
for the lower paid carries through remains to be seem.
And then there is the elephant in the room which everyone has danced
around….will VAT go up? No mentions yet of increasing the standard rate – but
no denials either.
The next Budget – late June? – is going to be interesting!
John Whiting, Tax Policy Director, Chartered Institute of Taxation
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