Pre-election season is officially here, and all 3 of the main parties have now launched their manifestos.
Laying out their plans for the next 5 years in Government, each party manifesto is filled with promises on what they can do to improve the economy and strengthen the future of UK businesses – so is it a case of “heard it all before”, or do they genuinely highlight big changes for businesses like yours?
We’ve waded through the detail so you don’t have to, with our breakdown of what stands out in each party’s manifesto, which are most important for businesses, and how these plans could affect you.
- No rise in income tax for those earning up to £80,000
- Income tax rate of 45p on earnings above £80,000 & 50p on earnings above £123,000
- Increase in corporation tax to 26%
- Tax avoidance programme to generate £6.5bn
Taking a “Robin Hood-style” stance, many of Corbyn’s financial plans are based on taking from the rich to give to the poor – according to their plans, 95% of people won’t see an increase in the amount of tax they pay, while top earners could see a significant increase in their tax bill. However, critics urge that this could encourage tax avoidance and drive top earners offshore.
While Labour aim to raise an extra £19.4bn from increasing corporation tax to 26%, they have also indicated plans to scrap quarterly reporting for businesses with a turnover of under £85,000 – plans which may come as welcome news to many sole traders and small businesses.
- Raise the tax-free savings allowance to £12,500 by 2020
- Raise the threshold for top rate taxpayers to £50,000
- Commitment to freeze VAT at 20%
- Cutting corporation tax to 17% by 2020, from the current 19%
The Conservatives’ original deadline of setting public finances straight by 2015 has now been extended to 2025, while only a general statement on intending to lower income tax leaves the subject open to change by the government. May has also chosen to scrap Cameron’s triple lock on pensions, introducing a double lock after 2020.
Those small businesses employing non-EU workers could see an Immigration Skills Charge of £2000 per year under the Tories, while a National Insurance holiday has been proposed for those businesses taking on ex-offenders, disabled people and those with mental health issues. Other key elements of the Conservative manifesto include increasing R&D spending to 3% over 10 years and a pledge to make a third of their purchases from SMEs by the end of the next parliament.
- Increase in tax for everyone by 1p for every pound
- Raise national insurance threshold to income tax threshold
- Maintaining corporation tax at 20%, rather than decreasing it
- Committing to £100bn additional infrastructure investment
The Liberal Democrats take a different stance again when it comes to reducing the budget deficit, choosing to increase every taxpayers’ income tax by 1p for every pound, as well as raising employee national insurance. However, the Lib Dems also promise to protect low earners’ ability to accrue pension and benefit entitlements.
Where employee rights are concerned, the Lib Dems want a presumption of flexible hours, as well as stamping out abuse of zero-hour contracts. They also promise to support entrepreneurs with a new scheme for new businesses paying £100 a week for 6 months to support living costs. Apprenticeships are a focus in the manifesto too, encouraging more participation with schools and businesses, and a two-fold increase in the number of businesses that hire apprentices.
Be prepared for change
What’s the best way to prepare your business for any new changes that could be introduced? Keep up-to-date with party policies, informed about new legislation, or even better, make sure your accountant is up to speed with any changes that might affect you and your business. If your current accountant isn’t, get one that does – it’s the best way to ensure you remain one step ahead of any economic changes the election may bring.
Are you thinking of changing your accountant? To see how it easy it can be, take a look at our 7-step process, or to find out more about how we can help with your accounts, just get in touch with us for a friendly, no-obligation chat.