26 06 2017

Future UK Tax Policy Uncertain, As May Focuses On Brexit

In a statement following the Queen's Speech, UK Prime Minister Theresa May discussed her Government's agenda in relation to Brexit and fleetingly discussed tax policy.

The Queen's Speech marks the opening of Parliament and is normally used to outline key policy changes the Government intends to introduce during the parliamentary term.

May said her Government would pursue "a Brexit deal that works for every part of the country and that commands the greatest possible public support."

May also reiterated plans to introduce several policies to facilitate the Brexit process, including a trade bill, a repeal bill, and an immigration bill.

But she made only a brief reference to tax, and a swipe at the main opposition party, Labour. "There is nothing fair about punitive tax rises that lead to fewer jobs, lower wages, and higher prices for ordinary working families," she said "There is nothing fair about racking up debts for our children and grandchildren to pay."

Mark Littlewood, Director General at the Institute of Economic Affairs, welcomed the focus on Brexit but said there was "cause for concern about certain manifesto promises that were not included."

Before the election, the Conservatives had pledged to increase the higher rate threshold to GBP50,000 (USD65,012), from GBP45,001 currently, and the personal allowance (the tax-exempt threshold) to GBP12,500 from GBP11,500 by 2020.

In its manifesto, released ahead of the General Election on June 8, the Conservative Party had pledged to reduce the main rate of corporation tax to 17 percent by 2020 from its current rate of 19 percent. It has also said it would freeze the rate of value-added tax for the duration of the next parliament.

These plans are however now subject to support from other parties' lawmakers, after the Conservative Party failed to secure a parliamentary majority.

Elsewhere the manifesto outlined plans to reform business rates (commercial property tax), with more regular valuations; to simplify the tax system; and to clamp down on tax fraud and avoidance.