What was claimed
Capital gains tax has been cut
Our verdict
The main rate has been cut. But overall, policy changes under the Conservatives and the Coalition have tended to push revenues up.
Tax cuts: corporation tax, inheritance, capital gains and the bank levy
22 March 2017
What was claimed
Inheritance tax has been cut
Our verdict
Government policies since 2010 have tended to push down inheritance tax, mainly because of an increased allowance for passing on “the family home”.
What was claimed
Corporation tax has been cut
Our verdict
The rate of corporation tax has been cut step-by-step since 2010. That’s been partly but not completely offset by a reduction in allowances and efforts to tackle tax avoidance.
What was claimed
The bank levy has been cut
Our verdict
It has, but it’s been replaced by a surcharge on bank profits, which is expected to increase taxes on banking.
“Can the PM explain to parents why cutting capital gains tax, cutting inheritance tax, cutting corporation tax, cutting bank levy are all more important than our children’s future?”
Jeremy Corbyn, 22 March 2017
It’s true that corporation tax and inheritance tax have been cut overall since 2010, when the Coalition government entered office. But this quote doesn’t give a balanced view of changes to capital gains tax or the bank levy.
Corporation tax revenues are lower mainly because of cuts to the main corporation tax rate.
The government can change taxes in ways other than adjusting the main rate. For example, it can change the threshold at which people have to pay the tax, tighten up the rules to counter tax avoidance, or offer reliefs and additional allowances.
The biggest drop in inheritance tax has come from an allowance which is meant to make it easier to pass on “the family home”.
Sometimes, the government can do these things at the same time.
Cuts to corporation tax rates have been been partly offset by measures to lower capital allowances or to reduce tax avoidance. Policies announced since the last general election have actually tended to increase the amount of corporation tax companies pay, despite cuts to the main rate. Corporation tax revenues are still down overall due to policies announced since 2010, but not as much as they would have been.
For capital gains tax, the main rate has fallen but policies under both the Conservative and Coalition governments have tended to push revenues up overall.
Finally, it’s arguably unfair to single out the cut to the bank levy on its own.
The levy was a particular kind of tax on banks, partly intended to stop them taking on risky funding strategies after the financial crisis.
It was introduced under the Coalition in 2011 and reduced from 2015, when a new surcharge on bank profits was introduced. Reducing the bank levy and introducing the surcharge will have boosted tax revenues, according to Treasury estimates.
We published a piece on whether the Conservatives had brought in £70 billion of tax cuts earlier this week. You can read it here.