Politicians Find Hung Parliament Taxing

ACCA looks at how parties’ tax policies will end up post-election
Launched to much fanfare over the past month, the parties’ carefully crafted manifesto and policy pledges now face being dropped or changed as politicians seek compromise in light of a hung parliament. With the Conservatives and Liberal Democrats most likely to do a deal, ACCA (the Association of Chartered Certified Accountants) takes a look at the tax policies that may, or may not, make it.
Conservative policies
Policy |
Conservative position |
Liberal Democrat position |
Agreement? |
IHT – Raising the IHT threshold to £1m |
One of the early flagship tax policies of David Cameron’s Conservatives – very popular with the grassroots |
Attacked by Nick Clegg during the campaign as a tax cut for millionaires – left leaning Liberal Democrat MPs have recently ruled out supporting the cut |
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NIC – Stopping part of the proposed NIC rise next year |
Dominated the Conservatives’ first week of campaigning, with a Conservative co-ordinated letter opposing the cut garnering plenty of business support |
Vince Cable called the business support for the plan “utterly nauseating” and accused Tories of “barefaced cheek” – but manifesto says they want to reverse the rise when finances allow |
|
CT – Cutting Corporation tax (CT) cut |
Conservatives would like to see this go down to around 25% – believe it would be self-funding as they’d decrease the asset depreciation allowance |
The Liberal Democrats have focused more on closing down CT ‘loopholes’ than on any changes to the rate itself |
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VAT – Potential VAT rise |
David Cameron has said the Conservatives have “no plans” to raise VAT, but refused to guarantee that |
Accused the Conservatives of a “VAT Bombshell” in the campaign, but haven’t ruled out a rise themselves |
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CTC – Reforming Child Tax Credits |
Looking to remove CTCs for those on high to middle incomes |
In the debates, Nick Clegg mocked his ability as a well-paid MP to claim CTCs |
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Liberal Democrat policies
Policy |
Conservative position |
Liberal Democrat position |
Will it survive? |
Income Tax – Raising the Income Tax personal allowance to £10k |
A big tax cut? An aspiration for the Conservatives but they are concerned how it would be funded |
Key part of their ‘fair tax’ approach – to be paid for by tax rises elsewhere |
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Introducing a £2m mansion tax |
The Conservatives claim that this idea is “unworkable” and poorly planned |
Designed to fund tax cuts elsewhere – originally set at £1m but revised upwards shortly after |
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CGT – Equalising the CGT and Income Tax rate |
The rates were originally equalised by the Thatcher government in the 1980s but will now be seen as a hindrance to the private sector |
Another part of the ‘fair tax’ approach – proceeds would go towards funding the £10k allowance |
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Introducing a per-plane green tax on flights |
Similar plans were floated by the Conservatives two years ago, although they were met with a frosty reception at the time |
Switching current per-passenger green tax to a per-plane one |
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Ending child trust funds |
Want to end contributions to child trust funds |
Want to end contributions to child trust funds |
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