Changes Expected Following UK Election

By Global Tax Weekly

Following their election win, the UK’s Conservative Party has said it will use new “freedoms” from Brexit to set its own tax policies, including in the area of VAT.

In its pre-election manifesto, the Conservatives promised to not raise rates of income tax, VAT, or National Insurance. It also cancelled plans to lower the corporate tax rate from 19 percent to 17 percent from April 2020. The Government has however committed to lower the tax burden of business rates (the UK’s commercial property tax), and increase the employment allowance tax relief for small businesses. Further, the research and development tax credit rate will be raised to 13 percent, and the Government intends to review the activities in scope.

It also reportedly intends to also raise the National Insurance threshold to GBP9,500 next year.

On tax enforcement, the Conservative Party committed to:

  • Double the maximum prison term to 14 years for individuals convicted of the most egregious examples of tax fraud;
  • Create a new, single anti-tax evasion unit within HM Revenue and Customs that will cover all duties and taxes;
  • “Consolidate” existing anti-evasion and avoidance measures and powers; and
  • Introduce a new package of anti-evasion measures, including measures “to end tax abuse in the construction sector, [to] crack down on illicit tobacco packaging”, and “to avoid profit-shifting by multinational companies.”

Finally, the Conservative Party stated that it would deliver on its pledge to introduce a unilateral digital services tax from April 2020.

Speaking ahead of the election, Boris Johnson had stressed his ongoing commitment to introducing the digital services tax, in line with many other countries throughout the world in recent years.

The Government intends to legislate for the DST to apply from April 2020. Plans to introduce the levy were confirmed in the 2019 Budget

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