With only weeks to go before the 'Big Day' the main political parties are all using finances and in particular taxes as a way to attract those extra votes. Here is a summary of proposals.
- Help To Buy ISAs
The Conservatives announced this in the budget with a planned start of October 2015. Broadly, this offers a tax free savings scheme to help people save to buy their first home. A bonus of 25% of the amount saved (maximum £3,000 bonus on £12,000 saved) would be available on such as scheme. So for any doctors with children looking to get their foot on the property ladder this could be good news.
Labour appear to support the idea of the Help To Buy ISA but would like to mandate the use of the funds raised through this new ISA to help new building. Labour believe that buildig new homes is the answer and pledges that people who live in an area for 3 years would have a priority access to these new homes under a first time buyers first policy.
It is thought that whoever gets into power, they will closely look at how further higher rate tax relief on pension contributions can be limited. This relief is currently running at £20billion per year and as usual looks to be an easy target.
Both the Conservatives and Labour have said that they will look to limit tax relief for additional rate tax payers. So for doctors earning £150k+ this could spell bad news for your pension contributions tax relief - whoever gets in.
- Inheritance Tax
The Conservatives have announced that they would like to raise the IHT threshold from £325k to £500k where your main residence is included - therefore effectively giving a married couple a 'nil rate band' of £1m. This would look to be good news for those doctors with significant assets in property and could reduce potential inheritance tax liabilties.
Labour have no specific plans as yet with regard to inheritance tax however they have come out strongly against the Conservatives plans as you would expect.
- Tax Avoidance
The Conservatives have been relentlessly active during their term to try to stamp out aggressive tax avoidance and evasion and have introduced numerous policies to this end.
Labour have been equally vocal in their opposition to tax avoidance and evasion and recently made the headlines with their plans to severely curtail the tax benefits of non-domiciled status.
- Income Tax
The Conservatives want to increase the tax free personal allowance to £12,500 and the higher rate tax threshold to £50,000.
Labour propose introducing a new starting rate 10% income tax band and raising the additional rate income tax band to 50%. There would be no changes to the existing basic and higher rate tax thresholds or rates.
- Mansion Tax
Labour would like to introduce a 'Mansions Tax' for properties valued over £2m. Therefore this would effect doctors with very significant homes.
- Corporation Tax
The mainstream corporation tax rate would be increased to 21%. This may effect doctors with Limited Companies set-up to shelter their private earnings.
Most political commentators agree that this is going to be a close run election. What is certain is there are bound to be tax changes. Why not make a diary note to get in touch when things have settled down to review your financial situation? Contact us on email@example.com or telephone 0117 9665699.