The UK’s tax code is almost 20,000 pages long, and the most recently published Finance Act 2019 is over 300 pages – compare that to Hong Kong which has a tax code of less than 300 pages. Therefore Britain’s latest Chancellor has a major task on his hand, and some would argue he may be better scrapping the existing system and starting again. However, the Chancellor should not be discouraged in his strive for simplicity – tax simplification is of vital importance, to encourage ease of business and reduce the compliance burden for companies and individuals. Also, a simple and transparent tax system is attractive for those businesses wanting to relocate to the UK, which has wider economic benefits for the country.
As a ‘starter for ten’, partner Nimesh Shah suggests ten ways the Chancellor could simplify personal taxes:
- Remove the tapering of the personal allowance when an individual earns more than £100,000 of income.
- Abolish the child benefit clawback when an individual earns more than £50,000.
- Make the personal savings allowance available to everyone and fixed at the same level – this is the amount of interest a person can receive tax free, but is not available to higher rate taxpayers.
- Abolish the marriage allowance – this is where one person can transfer 10% of their personal allowance to their higher earning spouse, provided they are a basic rate taxpayer.
- Merge income tax and National Insurance into a single tax system.
- Remove the tapering of the pensions annual allowance when an individual earns more than £150,000 of income.
- Have a single capital gains tax rate – there are currently five different rates that could apply when a person realises a capital gain.
- Abolish the inheritance tax main residence nil rate band and replace it with a higher overall nil rate band, which has not increased for over 10 years.
- Abolish the 3% SDLT surcharge for additional property purchases.
- Harmonise the SDLT systems for residential and commercial properties.
For more information, please contact Nimesh Shah.