- Introduction
The current UK taxation system is complex, often unfair, and disproportionately affects individuals while allowing large businesses and financial markets to contribute less than their fair share. This policy document proposes a comprehensive reform to ensure a fair, transparent, and growth-oriented tax system that benefits both the economy and the citizens.
- Objectives of the New Tax System
- Reduce the tax burden on individuals, capping total direct taxation at 25% of gross income.
- Eliminate regressive tax structures, such as VAT on essential goods.
- Ensure corporations and financial markets contribute fairly to the UK economy.
- Create a Sovereign Wealth Fund (UK-SWF) to future-proof the economy.
- Eliminate national debt within 12-15 years.
- Maintain a budget surplus without increasing borrowing.
- Key Tax Reforms and Revenue Projections
3.1 Individual Taxation Reform
- Simplified Personal Income Tax Bands:
| Income Range | Tax Rate |
| £10,000 – £19,999 | 10% |
| £20,000 – £29,999 | 11% |
| £30,000 – £39,999 | 12% |
| £40,000 – £44,999 | 13% |
| £45,000 – £49,999 | 14% |
| £50,000 – £54,999 | 15% |
| £55,000 – £59,999 | 16% |
| £60,000 – £64,999 | 17% |
| £65,000 – £69,999 | 18% |
| £70,000 – £74,999 | 19% |
| £75,000 – £79,999 | 20% |
| £80,000 – £84,999 | 21% |
| £85,000 – £89,999 | 22% |
| £90,000 – £99,999 | 23% |
| £100,000 – £249,999 | 25% |
| £250,000+ | 30% |
- National Insurance (NI) Replaced: Flat 5% tax on all income to simplify tax collection.
- VAT Reform:
- Essentials (fresh food, education, insurance, legal fees) exempt.
- Processed food taxed on a sliding scale. Between 1.5% and 8%
- Other Goods based cost sliding scale.
- £1 – £99.99 taxed at 15%
- £100 – £499 taxed at 20%
- £500 – £999 taxed at 25%
- Luxury goods, over £1000, taxed at 35%.
Estimated Revenue Impact:
- New Personal Tax Revenue (Including 5% NI): £256.11 billion.
- Previous Personal Tax + NI Revenue: £450 billion.
- Revenue Shortfall: -£193.89 billion.
3.2 Corporate Taxation Reform
New tiered Corporation Tax system:
| Profit Bracket | Tax Rate |
| Up to £1M | 12% |
| £1M – £9.99M | 15% |
| £10M – £49.99M | 20% |
| £50M – £99.99M | 22% |
| Over £100M | 25% |
Estimated Revenue Impact: £145 billion (up from £75 billion).
3.3 Business VAT Reform
- 5% VAT on all business purchases to ensure businesses contribute fairly.
- Applies to construction, maintenance, retail, and all industries.
Estimated Revenue Impact: £67.5 billion.
3.4 Expanded Stock Market Transaction Tax
- 2% tax on ALL UK financial transactions, including stocks, bonds, currency trading, and derivatives.
- Ensures high-frequency traders and financial markets pay into the system.
Estimated Revenue Impact: £1.8 trillion.
- Total Revenue Impact and Budget Allocation
| Category | New Revenue (£bn) |
| Personal Taxes (Income Tax + 5% NI) | £256.11 |
| Corporation Tax (Tiered) | £145 |
| Business VAT Reform (5% on purchases) | £67.5 |
| Expanded Stock Market Tax (2%) | £1,800 |
| Total Corporate & Market Revenue | £2.012 trillion |
| Final Revenue After Individual Tax Cuts | £2.012 trillion |
| Budget Surplus | £1.062 trillion |
- Debt Repayment & Wealth Fund Strategy
- Annual National Debt Repayment: £200 billion (eliminates £2.7T debt in ~12 years).
- Annual Sovereign Wealth Fund Contribution: £250 billion.
- Budget remains in surplus, ensuring financial stability.
- Economic & Social Benefits
- Tax relief for individuals: Workers keep more of their income.
- No tax loopholes for corporations: Ensures fair contributions from all businesses.
- Massive public investment: UK-SWF funds housing, energy, and infrastructure.
- Debt-free nation: Eliminates borrowing and wasteful debt interest payments.
- Strong budget surplus: No austerity, no financial crises, sustainable growth.
- Projected Impact on UK GDP
- Increased disposable income leads to higher consumer spending, boosting GDP.
- Stronger business investment as corporate taxes are fair but globally competitive.
- Less government borrowing reduces interest payments, allowing funds to be used more productively.
- Massive investment in infrastructure and technology through the Sovereign Wealth Fund improves productivity and future GDP growth.
- Higher taxation on financial speculation encourages long-term investment rather than short-term trading.
- Conclusion & Implementation Strategy
- Phased introduction over 5 years to allow businesses to adjust.
- Legal requirements for all businesses trading in the UK to register locally and pay tax.
- Stock market taxation to be gradually introduced to prevent market shock.
- Public transparency laws to ensure proper allocation of sovereign wealth.
- Final Summary
This tax reform removes financial instability, ensures fairness, and secures the UK’s future. It allows businesses to grow while ensuring individuals pay less tax and receive better services.
A fair, sustainable, and prosperous UK is within reach with this bold yet achievable reform.