The last of the major national party election manifestos has been published, with the appearance of the Conservative manifesto on 24 November. For those hoping for significant tax cuts based on earlier winks and nudges from Conservative grandees, the manifesto commitments may prove a little disappointing.

In fact, despite its repeated promises to deliver a ‘low-tax economy’, the programme set out in the manifesto would actually change very little in the area of personal taxation, in contrast to the significant shake-up pledged by Labour (and, to a lesser extent, the Liberal Democrats).

The Conservatives’ headline pledge is a promise not to increase the rates of income tax, national insurance or VAT. Such a freeze is likely to prove attractive to higher earners when compared with Labour’s promise to implement a new 50% rate of income tax on earnings over £125,000 and lower the threshold at which the current additional rate is paid to £80,000. In addition to this, the Conservatives promise to raise the national insurance (‘NI’) threshold to £9,500 next year, with the goal eventually to raise it to £12,500. The current primary NI threshold is already £8,632, so this first increase in the threshold will lead to a modest initial saving for affected taxpayers of around £100.

On capital gains tax, no promises are made either to freeze the rates or lower them. It is here that we see the most acute contrast between the Conservative and Labour manifestos, the latter of which promises to tax capital gains as if they were income, leading to a possible top rate of tax on capital gains of 50%. However, capital gains are not completely in the clear in the Conservatives’ plan. The party promises to ‘review and reform entrepreneur’s relief’. This relief currently applies, very broadly, to disposals of certain assets, such as shares or securities in a company, by individuals working in that business (subject to certain timing and other conditions). An individual can use this relief to reduce the rate of capital gains tax paid on a qualifying disposal to 10%, subject to a lifetime limit of £10 million. Any future reform of the relief may mean that it becomes harder for some taxpayers to obtain it.

In common with similar pledges by Labour and the Liberal Democrats, the Conservative manifesto promises to introduce an SDLT surcharge on non-UK resident buyers of UK residential property. The Conservative website states that the surcharge will be ‘up to 3%’, and this would be in addition to the 3% surcharge which already applies to purchases of second homes. This would give a top effective rate of SDLT of 18% for non-resident buyers. This is a far cry from the Prime Minister’s previous suggestion that he could seek to bring the top rate of SDLT down to 7%.

As already announced, corporation tax will remain at its current level of 19%, rather than falling to 17% as planned by the previous Chancellor, and a new digital services tax will be implemented. The manifesto outlines, for Northern Ireland only, the Conservatives’ intention to devolve responsibility for corporation tax. Could this be an attempt to draw business away from the neighbouring Republic of Ireland, where corporation tax is much lower than in the UK? And it is not only Northern Ireland which the party seeks to woo. Scottish whisky producers too are targeted – with a promise to review alcohol duty.

Other changes include cutting business rates for small retail businesses and for local music venues, pubs and cinemas, although the exact scope of these cuts is left undefined and may only last a year. Also included are a 1% increase on research and development relief for businesses, an increase in the employment allowance (which applies to businesses paying NI contributions) and the scrapping of VAT on female sanitary products.

It appears from this that, as was suspected in light of their spending promises, the Conservative party has backed away from some of the hints made about tax cuts over the past several months. That said, the election is of course about alternative visions for the country and, when set against its main rival, the Conservative manifesto remains very much the low-tax approach.

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