The simplification of the UK’s tax system is paramount, long overdue and must be carried out as a matter of urgency.
Commenting on Chancellor Sajid Javid’s announcement at the Tory party conference that a Budget would be held this year, and that he wishes to simplify the tax system, Blick Rothenberg partner Nimesh Shah said, “We have heard this before. It is now paramount that the UK’s tax system is simplified and given a major overhaul.”
He added, ‘The current system causes major problems, not only taxpayers and their advisors, but also for HM Revenue and Customs (HMRC) who have to administer a system that is antiquated and not fit for purpose.”
Nimesh said, “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.”
“The Chancellor should not be discouraged from striving for simplicity.”
He added, “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 which is particularly important right now and Britain should move forward.”
As a ‘starter for ten’, 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 ten years.
- Abolish the 3% Stamp Duty Land Tax surcharge for additional property purchases.
- Harmonise the SDLT (SDLT) systems for residential and commercial properties.
Nimesh said, “The Chancellor has the ideal opportunity to fix this once and for all I hope he takes the opportunity. This could very well be the Budget where there are actual ‘tax cuts’!”
For more information, please contact Nimesh Shah.