The Conservatives- IHT free family home
The Conservatives are promising to effectively take family homes out of inheritance tax in April 2017 by adding a transferable family home allowance of £175,000 to the existing inheritance tax nil rate band. This means a couple with a nil rate band between them of £650,000 will both also be able to use the family home allowance and so pass on the family home that is worth £1million to their children free of IHT. It seems that around 400,000 of us now have family homes valued in excess of £1million
Labour – Tax avoidance clampdown
The labour party manifesto will contain a 10 point programme aimed at tax avoidance. This includes the abolition of non-dom status. This will affect those people who are not UK domiciled, but who live and work in the UK. Currently they may elect to pay tax on their UK income and gains only on a remittance basis. But if they elect on a long term basis they must also pay an annual charge of £50,000.
The Labour Party would levy an annual mansion tax on high value properties, currently proposed as those in excess of £2million. The rates have not been disclosed but previous remarks by Ed Balls suggest that it would be banded starting at £3,000 per year. Owner-occupiers with low incomes may be allowed to defer payment until the property is sold, but second home owners may be charged a supplement.
The Labour Party also proposes to 50% top rate of income tax over £150,000 and to scrap the marriage tax relief and to restrict tax relief on pension contributions, possibly capped at 20% for earnings above £150,000. It proposes to reintroduce the 10p lower starting rate income tax.
Liberal Democrats – increase in tax rises balanced by the same amount clawed back from tax evaders
The Liberal Democrats propose increasing the personal allowance to £12,500 within a year of coming to power. They would also introduce a mansion tax but its introduction would be banded resulting in higher rates being paid by those in larger properties. They also propose new banking taxes.