The General Election takes place this Thursday.
With small and medium sized businesses making up the backbone of the UK economy there has been significant interest in the parties’ approach to the treatment of tax and private corporations.
The latest polls show the Conservatives and Labour as the two dominant parties so we have considered their respective manifestos and summarised the proposals on these areas in the link below. We have also included a short note in both parties’ position on Brexit, given the dominance of the issue in current UK politics.
Other pledges to note
From our review of the manifestos it appears that, whichever party forms the next government, businesses and individuals alike will be faced with changes to the tax system, significantly so under a Labour government.
It may be prudent to consider accelerating income at the current tax rates by taking dividends now, paying bonuses where possible and authorising distributions from offshore trusts. With respect to Labour’s capital gains tax proposals (particularly the possible end to Entrepreneurs’ Relief), it may be wise to consider rebasing company portfolios in order to extract any gains now at the known rate of 20% and dispose of investments that qualify for Entrepreneurs’ Relief, in order to utilise the reduced capital gains tax rate of 10%.
At this stage it is impossible to say with certainty what the parties’ respective tax policies will look like were either to form a government and any decisions should be considered in light of such uncertainty. It is generally accepted that there may only be a short window between the General Election and the next Budget (on Monday Labour’s John McDonnell announced he would deliver his first Budget on 5 February 2020). With this in mind, any tax planning may need to be undertaken during that period, when the new government is known.
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