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UK Gov't To Pursue Brexit, Digital Services Tax After Election Win

by Jason Gorringe,, London

16 December 2019

The Conservative Party in the UK has won an outright majority in elections held on December 12, 2019.

The party secured a total of 365 seats in the House of Commons, of a total of 650, with Labour securing just 203. The Scottish National Party secured 80 percent of the seats being contested in Scotland, with a total of 48.

The result gives the Conservative Party a crucial parliamentary majority, which will empower Boris Johnson to deliver on his pledge to "get Brexit done."

The Conservative Party has said it will use new "freedoms" from Brexit to set its own tax policies, including removing value-added tax on women's sanitary products.

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.

The Government 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 says it will deliver on its pledge to introduce a unilateral digital services tax from April 2020.

TAGS: individuals | Insurance | tax | small business | business | property tax | United Kingdom | enforcement | transfer pricing | construction | services | research and development | Scotland | BEPS

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