The proposals were unveiled by leader Jeremy Corbyn in the party’s manifesto on Tuesday.
It includes plans to increase taxes on Britain’s highest earners, introduce a levy on financial transactions and impose an “excessive pay levy” on companies with staff earning more than £330,000.
A 2.5% levy would be applied to firm on earnings over £330,000 and 5% on those over £500,000.
“Whatever your age or situation, people are under pressure, struggling to make ends meet. I am very proud to present our manifesto for the many not the few,” said Corbyn during a campaign rally in Bradford.
The money raised from the tax hikes will be used to fund proposals to scrap university tuition fees, build 100,000 more homes a year and retain the “triple lock” on pensions, resulting in the party spending £50bn.
Tax avoidance pledge
Last week, Labour unveiled its strategy for tackling tax avoidance, if it is elected into government on 8 June.
This includes proposals to review trusts and introduce a public register of trust assets and beneficiaries as well as introducing a tax on property held in overseas trusts.
‘Unintended consequences’
Rachael Griffin, tax and financial planning expert at Old Mutual Wealth, said the proposals “threaten to rip up the rule book on legacy planning”.
“There will be concerns that in attempting to improve efficiency and fairness in tax policy, policymakers re-invent the system with unintended consequences.
“The policy costings document outlines a proposal to review tax reliefs and the use of trust structures for tax planning purposes. Trusts are a long-established mechanism for legitimate inheritance tax planning and they are an effective mechanism for maintaining control over your affairs in later life and when you eventually pass.”
She added it is “common” to place a life insurance policy in trust so that the family of a deceased parent can access funds immediately, without the strain and possible financial difficulty involved in the probate process.
“Without placing the policy in trust, it is not uncommon for families to take on debt to tide them over until they are able to secure probate,” she warned.
“Also included in the manifesto costings are proposals for a new tax on properties purchased through an overseas trust. Proposals to make such property subject to UK inheritance tax were taken out of the Finance Bill when it was slimmed down after the snap election was announced. It is not clear if Labour’s plans will be an alternative to these measures or an addition to them.”
