Following their recent appearance before the Commons Treasury Committee, Kathryn Cearns and Bill Dodwell have written to the Committee setting out areas of the UK tax system for future simplification. Some of the more eye-catching areas include:
Digitisation of the tax system: including a unified, single tax and benefits account for all individuals which would act as a hub for all taxpayer/HMRC interaction, greater information provided by intermediaries (including via PAYE) to HMRC, and alignment of the UK tax year with the calendar year.
VAT: a redesign of the UK VAT system to smooth out the distortionary impact of the VAT registration threshold, which has a limiting effect on smaller businesses which deliberately stall their growth to remain below the threshold.
Employment status for tax purposes: a new statutory test and the possible introduction of an ‘engager’s levy’ payable by organisations which engage freelancers.
Reform of pensions taxation: to highlight the complexity or otherwise of future funding options.
Other areas include:
Improving PAYE IT systems: OTS notes that relatively small changes could help millions of individuals pay the right amount of tax when, for example, they change or take on additional jobs.
Simplifying the sectoral flat-rate expenses for employees: OTS recommends reducing the number of rates and enabling claims through the PAYE system or via the single taxpayer account.
Environmental taxes: including options to replace the existing road fuel duty.
High income child benefit charge: awareness is generally low even though the number of taxpayers brought into the charge has increased every year because the threshold has remained static. HMRC should consider giving targeted reminders including via the personal tax account.
Following their recent appearance before the Commons Treasury Committee, Kathryn Cearns and Bill Dodwell have written to the Committee setting out areas of the UK tax system for future simplification. Some of the more eye-catching areas include:
Digitisation of the tax system: including a unified, single tax and benefits account for all individuals which would act as a hub for all taxpayer/HMRC interaction, greater information provided by intermediaries (including via PAYE) to HMRC, and alignment of the UK tax year with the calendar year.
VAT: a redesign of the UK VAT system to smooth out the distortionary impact of the VAT registration threshold, which has a limiting effect on smaller businesses which deliberately stall their growth to remain below the threshold.
Employment status for tax purposes: a new statutory test and the possible introduction of an ‘engager’s levy’ payable by organisations which engage freelancers.
Reform of pensions taxation: to highlight the complexity or otherwise of future funding options.
Other areas include:
Improving PAYE IT systems: OTS notes that relatively small changes could help millions of individuals pay the right amount of tax when, for example, they change or take on additional jobs.
Simplifying the sectoral flat-rate expenses for employees: OTS recommends reducing the number of rates and enabling claims through the PAYE system or via the single taxpayer account.
Environmental taxes: including options to replace the existing road fuel duty.
High income child benefit charge: awareness is generally low even though the number of taxpayers brought into the charge has increased every year because the threshold has remained static. HMRC should consider giving targeted reminders including via the personal tax account.
