Covid-19 has hit many UK businesses hard. Losses carried forward will mean a significant drop in tax revenues for the foreseeable future, while the CJRS and SEISS will leave the UK government with unprecedented debt and deficit levels. Against this backdrop, tax increases may well be inevitable in the medium to long term. Rather than further tinkering to the UK tax system, structural reforms are needed if tax rises are to have a sustainable and meaningful impact. Suggestions for a tax reform framework include: aligning income tax and NICs; introducing a payroll levy equivalent to employer’s NICs for all businesses; aligning dividend and CGT rates with those of income tax; replacing SDLT, LTT and LBTT with an annual property values tax; and reducing the number of reduced and zero-rated supplies for VAT purposes.
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Covid-19 has hit many UK businesses hard. Losses carried forward will mean a significant drop in tax revenues for the foreseeable future, while the CJRS and SEISS will leave the UK government with unprecedented debt and deficit levels. Against this backdrop, tax increases may well be inevitable in the medium to long term. Rather than further tinkering to the UK tax system, structural reforms are needed if tax rises are to have a sustainable and meaningful impact. Suggestions for a tax reform framework include: aligning income tax and NICs; introducing a payroll levy equivalent to employer’s NICs for all businesses; aligning dividend and CGT rates with those of income tax; replacing SDLT, LTT and LBTT with an annual property values tax; and reducing the number of reduced and zero-rated supplies for VAT purposes.
If you are not a subscriber, subscribe now to read this content.
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