Finance Minister Jeremy Hunt Drops Most of U.K. Tax-Cut Plan
The U.K., already under pressure on several fronts, including Brexit, must now deal with one more potential financial crisis: the British government’s tax proposal for 2017 and beyond. That’s because Treasury had proposed to end one of its biggest tax breaks, the European Union-enforced tax-free capital-gains allowance. In exchange for that, the government has insisted that the top corporate tax rate would be cut to just 20 percent.
It is a huge concession by the government. A single person earning £50,000 can save £5,000 in tax. But if you save enough, you can get £10,000 back by paying nothing at all toward taxes. With the capital-gains tax-free allowance, you can earn £10,000 every year and save £5,000, and then pay zero tax. This is what happened in the U.K. after the country voted to leave the EU.
Now, the British Treasury has dropped the plan for the U.K. It was, in fact, intended to have dropped the EU-enforced capital-gains tax-free allowance.
But U.K. finance minister, Jeremy Hunt, dropped the plan anyway.
So, if the U.K. cuts taxes for corporations, people earning £50,000 can still save the equivalent of £5,000 on income tax. That’s a massive concession for the country. It’s worth pointing out that if the U.K. reduces its tax rate for all corporations to about 25 percent, according to a new study by the Institute of Fiscal Studies, the income tax rate for anyone earning under £50,000 per year would fall to 21 percent.
And if you do all this without a Brexit divorce from the rest of the EU, you can actually do much better. You get back the equivalent of all your money.
That’s a big concession for the U.K.
But what’s the reason for government