Across the different parties’ election manifestos there is a range of taxation measures which will affect particular business sectors. As with other areas, there is some common ground across parties and some points of differentiation. Here is a summary of some of the main sector specific tax proposals:
Common ground across parties
Change is almost certain in a number of areas regardless of who wins the election:
- Retail and business rates: for any business with a bricks and mortar footprint, and particularly retail, some shake up of business rates seems inevitable. The Conservatives propose a fundamental review of the business rates system. As a first step, they will further increase for one year (2020-21) the business rate discount for small retail businesses, and extend it to local music venues, small cinemas and pubs. Labour and Liberal Democrats both propose replacing business rates with a tax on land value, calculated on the basis of the land and payable by the owner not the tenant.
- Digital services tax: The digital services tax announced by Philip Hammond last year looks set to be introduced, taxing online technology giants and marketplaces: a 2% levy on revenue from search engines, social media platforms and online marketplaces that make more than £500m turnover a year globally. Conservative and Liberal Democrat manifestos commit to this. Labour is proposing a levy collected from tech giants and Internet Service Providers to pay for the running costs of its free broadband plans.
- Real Estate: Both main parties propose to charge additional levies for certain buyers of residential property. Labour would introduce a levy on overseas companies buying housing, as well as introducing a levy on holiday homes. The Conservatives propose to bring in a 3% stamp duty surcharge on foreign buyers – this is anticipated to be non-UK resident individuals, companies and ex-pats The Liberal Democrats are proposing a similar stamp duty surcharge on overseas buyers.
There are a number of additional Labour proposals that may have more of an impact on specific sectors
Financial transaction tax: Labour will extend existing stamp duty in some shares to apply to a wide range of transactions including corporate bonds, equity and credit derivatives transactions, and certain forex, commodities and interest rate transactions.
Public sector contracts: Labour’s tax transparency and avoidance programme proposes additional tax transparency requirements for businesses delivering public services.
Energy: A new Labour Government will introduce what they refer as a ‘’windfall tax’’ on oil companies, proposing to use these funds to help cover the costs of remedying ecological damage.
Education: Their manifesto reports that a new Labour Government will close what it perceives as the tax loopholes enjoyed by private schools, with such private schools also coming within the VAT regime.
Health: Labour has proposed to pay for free hospital parking by increasing the tax on private medical insurance premiums.
The Conservative manifesto also contains some specific sectoral tax proposals:
Single use plastics: The manifesto confirms that a Conservative Government will introduce a new levy on single use plastics.
Alcohol duty: The Conservative manifesto proposes to review UK alcohol duty to support British drinks producers (NB the Liberal Democrats also suggest this).
Construction tax: tax relief on the purchase, building, or leading of a structure will be increased from 2% to 3%.
These sectoral changes are in addition to tax proposals that may affect you as an employer [see https://www.grantthornton.co.uk/en/insights/election-2019-people-and-skills/ ] and corporate tax and reliefs [see https://politicsandeconomy.grantthornton.co.uk/post/102fv0j/election-2019-corporate-tax-revenue-fairness-and-efficacy ] as well as changes which may arise from Brexit.
Taken together, this underlines the importance of taking a ‘whole tax’ approach to reviewing points of exposure and opportunity. Looking at the entire tax system in the round is essential.
Irrespective of the outcome of the 2019 General Election, there will be tax changes to come.