Proposed tax increases in the Lib Dems’ 2015 election manifesto
A story in today’s Times (£) claims the Liberal Democrats’ manifesto for the 2015 election will focus on a number of tax policies designed to target the wealthy. What are they? I hear you asking. Well, make yourself comfortable…
Capital Gains Tax
The current proposals are that the higher rate of Capital Gains Tax (currently 28%) will be increased to the same rates as Income Tax: 40% for those earning over roughly £41,000 and 45% for those earning over £150,000.
Currently, any transfers or gifts made prior to seven years before death are not subject to Inheritance Tax. The proposed change would increase this to 15 years.
Already a controversial tax, the tax free amount of £325,000 has remained static since 2010 and has therefore been reduced, in real terms, due to inflation.
This has resulted in a far greater number of families being caught by inheritance tax than the small fraction it initially targeted.
Pensions are also in the Lib Dems’ crosshairs – the ‘excessively generous’ tax relief on current pension contributions would also be cut. Not content with that, Nick Clegg and his band of merry men would also cut the lifetime tax-free allowance of £1.25m to £1m.
After the changes announced in the Autumn Statement (annual contribution allowance reduced from £50,000 to £40,000 and the aforementioned lifetime allowance to £1.25m), the suggested policies seem somewhat at odds with the government’s aim of encouraging people to save – such as auto-enrolling employees in pension schemes.