Responding to George Osborne’s plans to cut corporation tax to less than 15 per cent, John McDonnell, the shadow chancellor has warned against turning the UK into a “tax haven”.
While there is no universally accepted definition of a what a “tax haven” is, a number of jurisdictions are invariably included in conversations on the topic. The most famous of which is probably the Cayman Islands.
But how do tax rates in the UK compare to those in perhaps the most famous “tax haven” of all?
|
Tax |
||
|
Income Tax |
20%/40%/45% |
None |
|
Employee social security/National Insurance |
12%/2% |
None |
|
Employer social security/National Insurance |
13.8% |
None |
|
VAT |
5%/20% |
None |
|
Corporation tax |
20% |
None |
|
Capital gains tax |
10%/18%/20%/28% |
None |
|
Stamp duty on shares |
0.5% |
None |
|
Stamp duty on property |
2%/5%/10%/12% |
7.5%* |
|
Inheritance tax |
40% |
None |
*Transfers of real estate by corporations
It’s difficult to see how a cut in Corporation Tax to less than 15 per cent would turn the UK into a “tax haven.” If the UK were to eliminate the above taxes that the Cayman Islands does not levy, revenues in 2015-16 would have been at least £459 billion lower than they were. This is the equivalent of all spending on health, defence, transport, education, public order, housing and environment, social services and industry, agriculture and employment.