George Bull

Written by: George Bull

George Bull

Senior Tax Partner

What should you look for in an election manifesto?

Most of the main political parties now seem to have a reasonably good idea of what their manifesto pledges might look like. We expect these to be published during the next week or so when they will be subject to detailed scrutiny.

While tax is a subject in itself, it also features as a major consideration in party proposals to address current social, economic and environmental issues. We’ve therefore identified some of these big issues and considered how party manifestos might use tax to address them.

The NHS       VAT
The climate emergency       Business taxation
Protecting the High Street       21st century workforce


Described by many commentators as the biggest issue of the election, bigger even than Brexit, no simple solution is available to the problems of the NHS. Money and people – and a lot of both of them – are required. We’ve already seen the Conservatives scrapping their plan to cut the corporation tax rate from 19 per cent to 17 per cent which will have the effect of making another £6bn available. How that flows through to the NHS in Wales (administered by the Welsh Assembly) and in Scotland (administered by the Scottish Government) remains to be seen.

What is described by the Treasury as the ‘NHS pension problem’ but which in reality is the annual pensions allowance taper which could affect employees in any sector, looks as though it could be subject to a short-term fix.

When it comes to supporting the NHS, there’s the prospect of reforming the VAT recovery mechanism for NHS trusts which will certainly make life easier for them, if the new government delivers on that.


There now seems to be a consensus among experts that both taxes and borrowing will have to rise in the next Parliament. Interestingly, not all the political parties seem to belong to that consensus. Nevertheless, history shows that when more tax is needed quickly after an election, the new government may increase the standard rate of VAT. That’s definitely one to watch out for. If the VAT rate increases, Scotland won’t receive any extra share of VAT receipts.

There’s also the prospect, or at least hope, that the new government might reduce the 20 per cent VAT rate on e-books, perhaps bringing it down to 5 per cent.

Another major VAT change is likely to be promised by the Labour Party, which is expected to subject independent school fees to 20 per cent VAT.

The climate emergency

The last Parliament enthusiastically declared a climate emergency, backed by a legislative commitment to achieve a net-zero carbon contribution by 2050 (2030 in Scotland). So far there is very little to show for that. There are plenty of tax possibilities which would help the next party of government to deliver on that commitment. For example:

  • reduce the rate of VAT on electricity generated from renewable sources
  • end the fuel-duty freeze
  • publish a roadmap to transition away from money-based taxes and towards carbon-based taxes.

You’d expect the Treasury to be very positive about all these: taxes are one aspect of climate policy which raises money for government. However, voters may not be so keen.

We delve into more detail as to how tax can affect climate change in this episode of our podcast, The Loop.

Business taxation

The notion that cutting taxes stimulates economic growth is becoming discredited and there seems to be little resistance to the idea that UK corporation tax rate may remain at 19 per cent.

However, there is growing awareness that all tax reliefs must be carefully targeted, subject to periodic review and if necessary accompanied by an expiry date. One relief which seems to be getting close to its expiry date is the entrepreneurs relief from capital gains tax. We expect to see several parties advocating the restriction or abolition of this relief.

Protecting the High Street

In many respects, central government is helpless to turn the tide of technology-driven changes in shopping habits. Continuing with UK endeavours to tax big-tech companies, at least until global OECD measures come into force, looks like a no-brainer for the manifesto writers.

Arguably of equal, if not greater, significance is the reform of business rates. Any commitment to this reform must be scrutinised carefully: what’s the timescale for implementation? Will the benefits for the winners be worthwhile? Who will be the losers, and how much extra will they pay? Interestingly, business rates in Scotland (a devolved tax) have been the subject of a major review with no clear conclusion on the way forward.

21st century workforce

So much could be done to improve taxation in the workplace. For example, national insurance landings could be aligned with income tax rate bands. The same rates of national insurance could apply to all individual workers, in whatever way their working arrangements are structured. However, this is increasingly complex with Scotland and Wales able to set their own tax rates while NICs are still retained by Westminster. Changes could be made to ensure that all benefits are treated in the same way for tax and NI purposes. And the links between universal credit and payroll could be strengthened to avoid claimant hardship. Some of these are little more than applied common sense. Others are political dynamite.

The private sector will also be affected by the continuing government campaign against off-payroll working (IR35). Progress towards finalising the operation of crucial changes which take effect from April 2020 has stalled and will have to be kick-started after the election.


One of the big unanswered questions of our time is who should pay how much tax and on what. It will be interesting to see which of the parties tackles that issue head-on in its manifesto.

Concerns about inequality are also reflected in calls to reform inheritance tax and the possible replacement of IHT with some form of wealth tax. While the VAT rate change which I mentioned above might be implemented very quickly, these changes would take a long time. There is, however, one exception to that. Council tax is a form of wealth tax, and a devolved one at that: it will be interesting to see whether any of the party manifestos contains a commitment to a council tax revaluation

For more information please contact George Bull

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