The Liberal Democrats have vowed to close tax loopholes in limited partnership firms and for private equity investors, as part of the party's action to "tackle the remaining deficit fairly".
Speaking at the Lib Dem conference in Glasgow yesterday, chief secretary to the Treasury Danny Alexander (pictured) pledged to continue to target the "wealthy" in its efforts to raise taxes.
He confirmed his party's plans to introduce a mansion tax, restrict pensions tax relief and increase capital gains tax, to "make sure that those who have the most will continue to contribute the most".
However, he did not confirm the party is considering raising taxes on those earning more than £50,000, as was suggested by an internal briefing note accidentally sent to journalists.
Alexander pledged his party would come down harder on tax avoidance. "Making sure [people] can't avoid their taxes is a job we are getting on with right now," he said. "I'm making no appology for going after tax dodgers."
He announced new measures which he hopes will allow the government to claw back an extra £10bn a year by 2015.
The government will start by closing a loophole in firms that are structured as partnerships, such as many advisory businesses. The proposal was already outlined in a brief consultation, which closed in August.
The consultation challenged the assumption that all individual LLP members in a firm are self-employed, which allowed them to pay less in income tax and national insurance contributions.
It also proposed to restrict the allocation of profits and losses among partnership members, particularly between individual and corporate members, where re-allocations are carried out to reduce tax liabilities.
Alexander announced he would also close a loophole that "allows private equity shareholders to siphen money out of their firms while dodging the intended income tax".
Private equity partners are currently allowed to tax their income as capital gains, as opposed to the highest rate of income tax.
Meanwhile the Lib Dems committed yesterday to further reduce income tax. Employees will in future not pay income tax "unless they earn more than a full time salary on a minimum wage job", Alexander said.
This would save low earners £700 a year he pledged, while promising a further reduction of £500 if the Lib Dems get re-elected at the next election.
