Boris Johnson has been elected as the Leader of the Conservative Party and will become the Prime Minister of the UK today, 24/07/2019.
During the race to succeed Theresa May, Johnson announced at various occasions taxation and spending changes. So, what are the details of these plans and how will they affect you?
Increasing the higher-rate income tax threshold to £80,000
This is probably the most extreme measure
he has in mind.
In the tax year ending 06/04/2020, individuals have to pay 40% income tax on
any earnings above £50,000. So, a person earning £75,000 a year, pays 40% on
£25,000.
Under Mr Johnson’s change, the point at
which the 40% higher rate kicks in would be raised by £30,000 to £80,000. This
represent a substantial increase by over 60%.
He claims “…this would represent a £9 billion tax boost to over 4 million
people according to the IFS, benefitting the top 10 per cent of earners to the
tune of almost £2,500 a year.”
National Insurance is a separate tax. It’s paid for by workers and companies and it is meant to fund state benefits, such as the NHS.
Johnson also hinted the National Insurance thresholds could be raised to help pay for the measure. At the same time, he signalled his intention to increase the point at which NI payments kick-in to boost lower earners.
Change in Stamp duty
Another idea which has been mentioned by Johnson is a cut of Stamp Duty Land Tax, with the scrapping of the tax on residential property worth less than £500,000. The proposed stamp duty cut would represent a major giveaway of up to £10,000 for first-time buyers and £15,000 for other property buyers. Clearly that’s potentially good news if you are looking to buy a home.
Of course, these are only things suggested in the run up to the conservative leadership election, which might be long forgotten once elected. FKGB will keep an eye on the development of these promises and we will write a future blog if any of this becomes legislation.
