General election: A summary of tax-related pledges in Labour’s draft manifesto

This is a brief summary of the tax-related pledges set out in the leaked draft manifesto. That draft has been amended today, and the amended manifesto “unanimously agreed”, BBC News has reported.

Labour would seek to “eliminate the current budget deficit within five years” but would borrow to invest for future economic growth.

It would “rule out rises in income tax for those earning below £80,000 a year, on personal national insurance contributions, and on VAT”. Ninety-five percent of taxpayers would be guaranteed no increase in income tax rates, and “everyone would be protected from any increase in personal NICs and VAT”.

A Labour government would “ask large corporations to pay a little more” corporation tax, while keeping the headline rate among the lowest of the major economies. (The party has announced that it would increase the rate for large companies from 19% to 26% by 2020, see Critics cast doubt on Labour plan to increase UK corporation tax rate.)

Measures to support small businesses would include reinstatement of the small business corporation tax rate and a package of reforms to business rates.

Labour would exclude from quarterly tax reporting, under the new Making Tax Digital regime, businesses with a turnover less than £83,000. This is presumably based on the VAT threshold, which was increased to £85,000 in April.

Labour would give HMRC “the resources necessary to clamp down hard” on those who seek to avoid “the responsibilities that the rest of us meet”.

Labour would consult on amending the Companies Act 2006 so that directors “owe a duty” to employees, suppliers and the environment as well as shareholders.

An “excessive pay levy” would be applied to companies with high numbers of staff on very high pay.

A Labour government would require, from firms that it does business with, “best practice” on paying tax, workers’ rights and other issues.

In the Brexit negotiations, Labour would prioritise retaining the benefits of the single market and the EU customs union. “The UK’s future prosperity depends on minimising tariff and non-tariff barriers …”

Labour would increase prosecutions and penalties for employers not paying the minimum wage, stop employers from recruiting only from overseas, and make zero hours contracts illegal.

Labour would overhaul the existing childcare support system in which “subsidies are given directly to parents who often struggle to use them”, and move to a system of high-quality childcare places with direct government subsidy.

It would maintain and extend the current commitments on free hours, make “significant” capital investment to ensure that places exist to meet demand, and phase in subsidised provision on top of the free hours entitlements.

Free school meals for all primary school children would be paid for by removing the VAT exemption on private school fees.

Labour would maintain the apprenticeship levy but take measures to ensure high-quality training.

Labour would give all workers equal rights, and ban zero hours contracts so that “every worker gets a guaranteed number of hours each week”.

It would raise the minimum wage to the level of the living wage, expected to be at least £10 per hour by 2020.

Labour would set up a commission to modernise the law around employment status. It would clamp down on bogus self-employment by shifting the burden of proof so that the law assumes that a worker is an employee unless the employer can prove otherwise.

Other proposed measures include:

  • a ban on “payroll companies, sometimes known as umbrella companies, which create a false structure to limit employers’ tax liabilities and limited workers’ rights”; and
  • giving employment agencies and end users joint responsibility for ensuring that the rights of agency workers are enforced.

Labour would “extend the rights of employees to all workers”. There are, the party said, “real concerns that rapid changes to the world of work are rendering existing employment categories outdated”.

Labour would review the cuts to universal credit work allowances and the new two-child limit for tax credits and universal credit.