According to top 20 accountancy firm Saffery Champness, Labour’s manifesto pledges to lower the higher rate threshold from £150,000 to £80,000 and to introduce a new 50p tax for those earning above £123,000, will hit both leaders in the pocket.
With salaries of £150,402 (the prime minister) and £138,451 (leader of the opposition), they would both face larger tax bills than before, although Corbyn’s take home pay as PM would still be more (just) than he takes home now.
The impact of the Labour tax changes would mean that the PM’s take home pay after tax would be reduced by approximately £6,821, from £91,190 to £84,369.
The opposition leader’s post tax pay meanwhile would go down by £5,645 from £84,278 to £78,633.
The chancellor would also see his tax bill go up. Philip Hammond currently earns £142,267 and takes home an estimated £86,607. This would fall to £80,561, down £6,046.
Labour’s tax rises would also hit a number of MPs who earn more than their basic salary of £74,962.
In contrast, the Conservatives have pledged to continue to lower taxes and simplify the system. However, they have said they will drop the tax “triple lock” so paving the way for “a good deal more wriggle room to adjust tax rates”, as Saffery Champness partner James Hender points out.
He says that to a large extent the Tory and Labour tax policies on offer are more or less in line with what might have been expected.
“What is clear is that both parties have noted the need, caused by Brexit among other factors, for public capital investment which will require the ability to either raise more tax or increase borrowing.”
But, he warned the electorate not to lose sight of the various tax changes which are on the horizon regardless of the election result.
“While many items were dropped from the Finance Bill in the pre-purdah rush, we can expect tax payers to have to grapple with a raft of complex legislation, as well as the shift to Making Tax Digital, irrespective of who gets the keys to No 11 on 9 June.”