We are in an odd position following the election, and what will happen to the UK tax system in the coming months is now anyone’s guess. Before 8 June 2017, a much-reduced Finance Bill was enacted, with the expectation of a further Finance Bill to be tabled before the end of the month. This second-half of the original Finance (No.2) Bill contains all the contentious provisions dropped in order to ensure the first-half was nodded through prior to the General Election 2017. This was necessary to put in place all the basic tax provisions like current year rates and allowances. Now, there is a huge question mark not only over the contents of the forthcoming Bill, but the direction of travel generally.
One Conservative manifesto promise, to raise the threshold for the higher rate of tax to £50,000, is likely to fall victim to the political limbo. With Mr Corbyn vowing to vote-down Mrs May’s Queen’s Speech, this and other tax-reduction measures are unlikely to be implemented.
Tax Statistics – The Summer Income Tax data, published on 31 May 2017, shows that:
- In 2014/15 the top 50% of taxpayers had 75.3% of income and were liable for 90.3% of tax
- The number of people paying any income tax at all is predicted to fall by 400,000 in the current tax year compared with 2014/15, mainly as a result of increases in the Personal Allowance
- The top 1% of taxpayers had 12.3% of total income but were liable for 27.2% of total tax
- Total Income Tax of £167 billion in 2014/15 is expected to increase to £173 billion this year.
These statistics only relate to income tax. National Insurance raises £110 billion, Capital Gains Tax a further £6.9 billion and Inheritance Tax £3.8 billion.
A few weeks ago we thought we knew what the immediate future held for UK personal tax but now all bets are off.
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