Tax

March 31, 2015 7:39 PM

Liberal Democrats in government have cut taxes for people on low and middle incomes, to help families get by. We have gone even further than our manifesto pledge to let people earn £10,000 tax free by increasing the personal allowance to £11,000. This will have lifted over three million people out of income tax altogether and delivered a tax cut of more than £800 for millions of low and middle income tax payers in this Parliament.

Our aim is to re-balance the tax system away from taxing work and towards unearned wealth, so the next generation can keep more of the money they earn and live in a more equal world. We will raise the personal allowance to at least £12,500, cutting taxes for those on low and middle incomes by around a further £400. And as we finish the job of balancing the books we will use taxes on the wealthiest, on banks, big business and on polluters to limit the impact of deficit reduction on public services. This will include taxes such as a High Value Property Levy on residential properties worth over £2million.

We do not think low and middle income earners should bear the burden of tax rises to tackle the deficit: our plans do not require any increase in the headline rates of Income Tax, National Insurance, VAT or Corporation Tax.

Record of delivery Promise of more
Given a tax cut of £800 to low and middle income earners by letting you earn £10,600 tax free from this April. Raise the personal allowance to at least £12,500, cutting your taxes by nearly £400 more.
Ensured the wealthiest pay their fair share with a new 7% rate of stamp duty on homes sold for more than £2million. Introduce a High Value Property Levy (the 'Mansion Tax') on residential properties worth over £2million.
Invested £1bn in extra tax investigators who have brought in £60bn since 2010 from those seeking to pay less than their fair share. Cut the deficit without slashing public services by bringing in £6bn extra tax a year from a further crack down on tax avoidance.

Key Policies

1. Increase the Personal Allowance to £12,500. We want people to be able to keep more of the money they earn so they have a real incentive to work. That is why we will increase the Personal Allowance to at least £12,500 in the next parliament, delivering a tax cut worth £400 to millions of low and middle income tax payers.

2. Introduce a High Value Property Levy. It is important that those who can most afford it help the country get back on its feet by paying their fair share. That is why we want to introduce a banded High Value Property Levy, or 'Mansion Tax' on properties valued at over £2million to help balance the country's books.

3. Deliver an extra £6bn by tackling tax avoidance. We have made huge progress in clamping down on tax avoidance and evasion already, but there is still a minority of wealthy individuals and companies who actively seek to avoid paying their fair share. This cannot be right. That is why we will aim to raise an extra £6bn by 2017/18, by taking tough action against corporate tax evasion and abusive avoidance strategies.

The Personal Allowance will increase to £11,000 in April 2017 only because Liberal Democrats made it a priority in 2010 and secured a commitment to increase it in the coalition agreement. David Cameron insisted during the TV debates that it was "unaffordable". Put simply without the Liberal Democrats in government, it wouldn't have happened.

The point of this policy is to help working families and ensure that work is rewarded. Our reforms to back-to-work support will help more people off benefits and into work.

KILLER FACTS

1. By April 2015, we will have taken 3.4 million people out of income tax and given a tax cut of £825 to millions of basic rate taxpayers.[ii]
3. Lifting the personal allowance to £12,500 will mean a further tax cut of £400, taking the total value of our tax cuts to over £1,200 for a basic rate tax payer.
4. The IFS have said our policy of increasing the Personal Allowance is more effective at helping those on low incomes than Labour's 10p rate.[iii]
5. A £90million property in Kensington and Chelsea is charged council tax of just £41 per week, or just 0.002% of its value over the whole year.[iv]

BASIC FACTS

1. The value of the Personal Allowance in May 2010 was £6,475.[v]
2. The Personal Allowance will increase to £10,800 in April 2016 and £11,000 in April 2017, lifting 3.7 million people out of income tax altogether.[vi]
3. If you earn above £100,000 the allowance is progressively withdrawn, at a rate of £1 for every £2 above £100,000 you earn.


[i] HMRC Annual Report and Accounts 2013-15

[ii] Autumn Statement 2014, p 55

[iii] IFS Better options exist to help low earners than 10p tax rate

[iv] www.rbkc.gov.uk Council tax setting for 2014-2015

[v] HMRC Rates and allowances: Income Tax

[vi] The Budget 2015