Posted on 8 May 2015
After weeks of campaigning with the majority of polls predicting that there may have been a need for another coalition Government we now have a small overall majority for the Conservative Party.
But now that the General Election is over, what does David Cameron and the Conservative Party being in power for the next 5 years mean for us, our businesses and more specifically, our taxes?
The Conservative leader said that “working people in this country have paid enough tax” and so, the party would focus on other ways of clearing the deficit, such as reducing the welfare bill, spending cuts, reducing government waste and clamping down on tax avoidance "without reaching into the pockets of hard-working people and taking their money".
The previous Conservative-Lib Dem coalition government’s focus on tax avoidance is set to continue, as HMRC continue to pursue the collection of taxes from businesses and individuals who have used certain tax planning “products and schemes” and to focus their efforts on high net worth individuals with more complex tax affairs. The Government urgently needs to balance the UK deficit and the collection of historic and disputed taxes is part of their budgetary strategy.
The recent introduction of the so called “Google Tax” will soon begin to impact those international businesses where significant profits are held in overseas companies, specifically where the overseas entities have been structured for group tax planning purposes. From a deterrent perspective the increasing of tax related penalties for those who have either avoided or evaded taxation combined with the prospect of more criminal prosecutions for tax evaders is designed to send a clear message.
The Conservative Party have pledged that there will be no rise in VAT or National Insurance contributions and that this will continue throughout the whole of the 5 year term. Alongside this, the party pledges to maintain the abolition of employers’ NICs for under 21s and next year for apprentices under 25. An increase in the level of the Inheritance tax threshold for married couples or those in a civil partnership to £1m had been put forward previously but was perhaps blocked by the coalition. Now that the Conservatives are free from this restriction it is likely to be enacted at some point over the next 5 years.
Cameron also promised a “significantly higher” and permanent level for the Annual Investment Allowance (AIA) which we hope will put to an end to the constant changing of the relief. We can only speculate what level will be chosen but hopefully this will be in excess of £250,000 per annum.
Another of the key tax policies saw Cameron pledge to “make Britain the best place in the world to start a business” by tripling the number of business start-up loans to 75,000 and by giving businesses the most competitive taxes of any major economy.
Previously announced tax cuts, including raising the 40p tax threshold to £50,000 and increasing the personal allowance to £12,500, were included alongside the new promise that "nobody working 30 hours on the minimum wage will pay income tax on what they earn."
Given the outcome there are perhaps no immediate actions required until such time as the final raising of the IHT reliefs and income tax thresholds are enacted.
Click here to download