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LibDems reject 50p income tax but back £1m lifetime allowance

Nick-Clegg-at-LibDem-Rally-700x450.jpg
Nick Clegg at the Lib Dem conference in Glasgow

The Liberal Democrats have narrowly rejected campaigning for a 50p top rate of income tax but backed plans to cut the lifetime allowance to £1m and reform capital gains tax.

The party debated the Fairer Taxes policy motion on the conference floor at its annual conference in Glasgow this week. The motion allowed a separate vote on the top rate of income tax with arguments made by leading LibDem figures.

Former MP Evan Harris had argued for the re-introduction of the rate, which was cut to 45p in the 2012 budget, in a bid to differentiate the party from the Conservatives.

LibDem Treasury spokesman and MP for Bristol West Stephen Williams argued to keep the rate at 45p and was backed by Treasury chief secretary Danny Alexander.

The rest of the Fairer Taxes motion was passed and backed plans to cut the annual lifetime pensions tax relief to £1m, from £1.25m, and reform to capital gains tax so inflation is included when calculating gain, alongside a move to align it with income tax. 

The paper also pledged to raise the personal allowance to £12,300, and reiterated support for its “mansion tax” proposal which would see a 1 per cent charge on properties worth more than £2m.

A LibDem internal memo, sent to journalists by mistake, says the party would look to target those earning £50,000 or more, suggesting such individuals are “not middle income earners”.

Williams says: “I am delighted the Fairer Tax policy motion has passed. A mansion tax and an increase to the personal allowance will be fairer than raising the top rate of income tax.”

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