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UK Election 2019: Can you prepare now for potential future changes?

7 November 2019 | 3 minute watch

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UK Election 2019: Can you prepare now for potential future changes?
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UK Election 2019: Can you prepare now for potential future changes?

Note: We have provided a transcript of the video if you are unable to listen to the audio. This transcript is generated using a combination of speech recognition software and human transcribers and may contain errors.

Hello and welcome to the first of our video updates about the UK Election 2019. This election promises to be one of the most polarised in a generation, with real substantive difference between the two parties and their tax policies. Over the coming weeks, we're going to be introducing a series of videos looking at the different parties and individual tax policies, and most importantly what taxpayers should be doing now to get their affairs in order before the election happens.

The headline policy for any manifesto these days is income tax and this is where we see one of the key differences between the parties. The Conservatives are looking to reduce income tax, particularly for high earners currently on the 45% rate, whereas Labour have said they will increase it, reintroducing the 50% rate above £123,000 and the 45% rate above £80,000 while retaining current tax rates for those with income below that level. This will impose an immediate cost on people who have income above that level. So individuals should be looking at whether or not they should declare dividends now, or ask bonuses to be brought forward in much the same way they did in 2008 when the 50% tax rate was first introduced.

While it isn't anyone's stated policy, there are lots of rumours about increasing capital gains tax rates, either as a general increase or more dramatically as an aligning of the rates of income tax and capital gains tax. So again, individuals with discretion over when to generate capital gains, for example by the sale of marketable securities or interest in private companies, may look to bring those forward so they're generated prior to the election and before any change in the rates. Given the inherent uncertainty in the outcome of the election, it may be important for some people to not do things that they wouldn't otherwise have done. This should be thought of more as bringing forward action you might otherwise have taken.

From a timing point of view, there's a lot of speculation about when changes could be brought in. Conventionally, changes in tax rates only happen at the beginning and end of a tax year, so the 6th April each year. However, in 2010 when the coalition government was elected they had an emergency Budget. About six weeks after the election they brought an immediate change in capital gains tax rates, in that case a reduction. We may see that happen again, and six weeks may be longer than a new Labour government wants to wait in order to bring in its headline policies. We could see changes happen very quickly after an election, which mitigates in favour of action beforehand, or at least being prepared to act beforehand.

That's all from me for now, but please come back next week to hear further updates from my colleague Claire Harris. Thank you.

Chris Groves sets the scene and why taking action now might be the most practical option for some people.

If you have any questions regarding the UK General Election 2019, please contact your usual Withers contact.

Note: We have provided a transcript of the video if you are unable to listen to the audio. This transcript is generated using a combination of speech recognition software and human transcribers and may contain errors.

Hello and welcome to the first of our video updates about the UK Election 2019. This election promises to be one of the most polarised in a generation, with real substantive difference between the two parties and their tax policies. Over the coming weeks, we're going to be introducing a series of videos looking at the different parties and individual tax policies, and most importantly what taxpayers should be doing now to get their affairs in order before the election happens.

The headline policy for any manifesto these days is income tax and this is where we see one of the key differences between the parties. The Conservatives are looking to reduce income tax, particularly for high earners currently on the 45% rate, whereas Labour have said they will increase it, reintroducing the 50% rate above £123,000 and the 45% rate above £80,000 while retaining current tax rates for those with income below that level. This will impose an immediate cost on people who have income above that level. So individuals should be looking at whether or not they should declare dividends now, or ask bonuses to be brought forward in much the same way they did in 2008 when the 50% tax rate was first introduced.

While it isn't anyone's stated policy, there are lots of rumours about increasing capital gains tax rates, either as a general increase or more dramatically as an aligning of the rates of income tax and capital gains tax. So again, individuals with discretion over when to generate capital gains, for example by the sale of marketable securities or interest in private companies, may look to bring those forward so they're generated prior to the election and before any change in the rates. Given the inherent uncertainty in the outcome of the election, it may be important for some people to not do things that they wouldn't otherwise have done. This should be thought of more as bringing forward action you might otherwise have taken.

From a timing point of view, there's a lot of speculation about when changes could be brought in. Conventionally, changes in tax rates only happen at the beginning and end of a tax year, so the 6th April each year. However, in 2010 when the coalition government was elected they had an emergency Budget. About six weeks after the election they brought an immediate change in capital gains tax rates, in that case a reduction. We may see that happen again, and six weeks may be longer than a new Labour government wants to wait in order to bring in its headline policies. We could see changes happen very quickly after an election, which mitigates in favour of action beforehand, or at least being prepared to act beforehand.

That's all from me for now, but please come back next week to hear further updates from my colleague Claire Harris. Thank you.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.

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