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Brexit Party pursues 'clean-break Brexit' to shape economy

While the Brexit Party’s main priority is to take the UK out of Europe, its ‘contract’ also contains some radical reforms to corporation tax. 

27th Nov 2019
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As the party’s leader was at pains to explain, the Brexit Party did not feel it appropriate to publish a manifesto ahead of next month’s general election. Instead, it has issued a “contract with the people”. This is intended to be “a targeted set of deliverable pledges” and enthusiasts can literally sign to show their support for the party and its principles.

The decision to still away from following political orthodoxy may also have owed something to the nature of the document, which is about a quarter of the size of those already published by competitors and contains considerably less detail.

Given the Brexit Party’s name, it comes as no surprise to find an opening line that proclaims “Our priority is to leave the European Union and deliver the Brexit that 17.4 m voted for in 2016”.

Going a step further, the party takes the view that a clean break Brexit will shape the future of the nation’s economy and society.

Secondary headlines include proposals to cancel HS2 and to cut the foreign aid budget by 50%.

It also expects to save £13bn a year in payments that are currently made to the EU. Readers may contrast this last “dividend” with the Lib Dems’ manifesto that is built around a £50bn Brexit “dividend” by which it believes the United Kingdom will benefit as a result of remaining in the EU.

Investment

It is proposed that funds be invested in a number of different areas. These will include

  • The NHS, including the provision of more medical staff.
  • Social care.
  • Strategic industries such as steel, railways and defence. This last proposal is heralded as a means of creating thousands of jobs.

Taxation

The ‘contract’ contains a series of pledges in the tax field that many will regard as radical. While the Brexit Party acknowledges that it does not expect to become a majority ruling party, there has to be a possibility that it could hold the balance of power and have enough influence to persuade coalition partners to adopt some or all of a raft of measures that includes

  1. Reforms to corporation tax (see below).
  2. Introducing a new simpler system to replace business rates. The stated desire is to help small high street retailers and leisure operators outside the M25.
  3. Any reductions resulting from simplifying business rates will be funded by an online sales tax.
  4. Scrap interest on student loans.
  5. Introduce a new, workable apprenticeship scheme.
  6. Abolish inheritance tax, which the document describes as “double taxation”.
  7. Zero rate VAT on domestic fuel.
  8. Eliminate import tariffs on a number of different products including certain foods, footwear and clothing.
  9. Ring fence the NHS budget and the tax revenues that pay for it.
  10. Scrap the apprentice levy (sic) and improve tax incentives for employers to take on genuine apprentices.

Corporation tax and income tax

Under the enticing title of “turbo-charge the economy”, a dramatic change is proposed to corporation tax legislation in United Kingdom.

If the party’s policy is ever enacted then, at an estimated cost of £5.1bn each year, the Brexit Party will bring in a zero rate for the first £10,000 of pre-tax profits. In doing so, it projects that almost two thirds of companies will fall out of the corporation tax regime, while only reducing the Exchequer’s take by approximately 6%.

The ‘contract’ is silent with regard to the headline rate of corporation tax and whether it will follow the Conservatives’ original plan to reduce this to 17% next year or the latest proposal to scrap that and maintain the current 19% rate.

It appears that the Brexit Party has no policy proposals to improve or change the income tax system.

Universal credit

The party follows the generally accepted view that the universal credit system has not been a success. It suggests that this should be reformed by

  • Reviewing the system and introducing reforms within two years.
  • Rooting out fraud.
  • Accelerating payment processes with a five-week maximum wait.
  • Reviewing the impact of pension changes on women who have been disadvantaged by the increase in qualifying age.

Other significant sector-specific proposals

Several other ideas will be of great value to those in specific sectors.

EU subsidies and grants will be directly replaced, helping businesses such as farmers, fisheries, universities and research bodies.

Transitional relief will be provided to other sectors including the automotive industry.

Freeports will be created in certain regions in an attempt to encourage investment and create new jobs.

Financial services regulations will be overhauled and simplified with the intention of boosting lending to small and medium enterprises.

The housing system will be rebuilt to encourage small and medium-sized developers.

There is also a commitment to supporting the future of the NHS as a publicly-owned, comprehensive service that is free at the point of use. This will be supplemented by support for medical research and development in an attempt to “stop the taxpayer being ripped off by pharmaceutical companies”.

Summary

The Brexit Party has published what might be regarded as manifesto-light.

The party’s primary goal is to take Britain out of Europe. At the same time, it has introduced an innovative tax-free base for corporation tax that would effectively take many small businesses out of the system altogether.

However, there is no sign that it has even considered streamlining income tax legislation.

Find out more in The Accountant's Guide to Election 2019

Replies (1)

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By ireallyshouldknowthisbut
27th Nov 2019 13:35

"Clean break Brexit" now there is a big fat oxymoron if ever there was one.

how is the previous failed policy of no tax for the first £10k of CT "radical"? It lasted, what 3 years or was it 4?

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