This is the first of a series of blogs looking at the effect of the Autumn Statement and the potential tax issues that will affect companies and individuals as the political parties seek to adjust their tax policies to suit their electoral goals in May 2015.
In the first of these blogs I look at the Conservative proposal on income tax to raise the personal allowance to £12,500 and the threshold at which higher rate tax is paid to £50,000. Both pledges have been promised to be redeemed by the end of the next Parliament i.e. May 2020. The interesting point to note is that the excited opposition to these “unfunded tax cuts” belies the fact the they are not actually particularly ambitious. The personal allowance was raised in this Parliament from £6,475 to £10,600; a rise of over £4,000. The rise in the next Parliament is less than half that amount.
The rise in the higher rate tax threshold is more substantial but affects a considerably lower proportion of the population.
It is still anticipated that because of fiscal drag, the numbers of tax payers caught by the higher rate taxman will still remain roughly constant. So it will be interesting to know whether those who oppose the raising of the higher rate tax band are content to see the 40% band becoming the new basic rate for millions more people.
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