Income Tax and how it could affect you

Last week we highlighted the differences between the main political parties views on Inheritance Tax. This time we take a look at income tax and how it could affect you?

The Tories have committed to no increases in income tax or national insurance. They also pledged to increase the tax-free personal allowance to £12,500 and the higher rate threshold to £50,000.

Labour leader Ed Miliband has said the party would not increase the basic or higher rates of income tax or national insurance. He also promised to introduce a lower 10p starting rate of tax, paid for by ending the Conservatives’ marriage tax allowance, and to bring back a 50p top rate of income tax for those earning more than £150,00.

The Liberal Democrats have said they will raise the income tax threshold to at least £12,500, and are annoyed that their so-called coalition partners have stolen this sure-fire vote winner. They also want to increase the tax that higher and additional rate earners pay on dividends by 5%, in an effort to target company directors who pay themselves in dividends rather than salary.

Branding itself a ‘low-tax party’, UKIP has said it would increase the personal allowance to £13,000 by 2020. It has also proposed a new 30% income tax band to be paid by those earning more than £55,000.

While UKIP wants to cut, the Greens want to hike. The party has set out plans to raise the additional rate of income tax, currently 45% for earnings over £150,000, to 60%.