01582 463150

Email: info@homer-co.co.uk

TAX RATES IN 2016

The Liberal Democrats have put forward their latest ideas on tax

The next General Election is due on 7 May 2015 and politicians are already jostling for position, with talk of another coalition in the air. As a result, the Liberal Democrats’ latest paper on tax policy has considerably more relevance than some of its predecessors. The paper, issued for discussion at this month’s party conference in Glasgow, makes a wide range of proposals. Among the more notable are:

An end-of-the-Parliament target for the personal allowance to match the income level equivalent to full-time employment on the National Minimum Wage (around £12,300 from October 2013). The allowance is currently £9,440, rising to £10,000 in 2014/15.

A choice of either leaving the top rate of income tax unchanged, or returning it to 50%, subject to a study showing “that it was likely (on the balance of probabilities) that the revenue raised was less than the cost of making the change.”

A further reduction in the lifetime allowance for pensions to £1m, but no other changes to pension tax reliefs. The allowance is currently £1.5m, falling to £1.25m from 6 April 2014 (at the same time as the annual allowance drops by a fifth to £40,000).

A reduction in the individual capital gains tax annual exemption from the current £10,900 to £2,000, with gains taxed at full income tax rates, i.e. up to 45%/50%. To complicate matters for the greatly increased number of CGT payers, indexation relief would be reintroduced.

The introduction of a Land Value Tax, to “replace business rates and property taxes.” However, it would not usurp the role of the Lib Dem’s beloved mansion tax, which remains on the agenda at 1% of residential property value of £2m.

The period after which lifetime gifts would be ignored for inheritance tax purposes would be extended from seven years to fifteen. Ultimately the tax would move to an accessions/capital receipts basis, under which tax would be paid by the recipient(s) of bequests (after a lifetime allowance is exceeded), based on their income and circumstances.

While these ideas may never see the light of parliamentary day, they could serve as a useful checklist for long term tax planning.

The Financial Conduct Authority does not regulate tax advice.

Leave a Reply


Homer & Co LLP, 3 Kinsbourne Court, 96-100 Luton Road, Harpenden, Hertfordshire AL5 3BL
T: 01582 463150 E: info@homer-co.co.uk

© Homer & Co LLP . The material on the site is the copyright material of Homer & Co LLP. You may not copy, reproduce, republish, disassemble, decompile, reverse engineer, download, post, broadcast, transmit, make available to the public, or otherwise use Homer & Co LLP content in any way except for your own personal, non-commercial use. This includes but is not limited to all individual fund manager data such as rankings of fund managers and ratings of fund managers. Homer & Co LLP does not accept any liability for your reliance upon, or any errors or omissions. Any other use of Homer & Co LLP content requires the prior written permission of Homer & Co LLP.

© 2013 Homer & Co LLP. Homer & Co LLP is authorised and regulated by the Financial Conduct Authority no: 498583 and is bound by its rules.

Homer & Co LLP is a Limited Liability Partnership.Registered in England and Wales Company No. 0C344040. Registered Office: The Robbins Building, Albert Street, Rugby. FCA Firm Number: 498583 Legal. The information contained in this website is subject to the UK regulatory regime and based on our understanding of UK taxation laws. It is therefore subject to change. The website is primarily targeted to UK residents aged 18 and over.