Simplify the tax system, Santa Brown

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Last week we asked AccountingWEB members what they would most like to see in this winters Pre-Budget Report. The results of the survey make interesting reading.

Most practitioners said they would like to see a more simplified tax system.

Simplification was the dominant theme of the comments, echoing number of issues raised on AccountingWEB this autumn. For example, the ICAEW Tax Faculty's complexity barometer indicates that tax legislation has become increasingly complex in the last decade. So it is not surprising that respondents identified some obvious areas for change here.

Rebecca Benneyworth had added a further simplification measure - abolish both NCDs and t...

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29th Nov 2005 17:51

complicating the simplifications
I like the idea of amalgamating IT and NIC as it is honest but this may be very bad news for pensioners and other classes of taxpayors who do not usually pay NIC.

So to avoid disadvantaging them when simplifying Gordon Brown will have to introduce more reliefs which will create more complications.


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By Anonymous
29th Nov 2005 22:04

NIC
The problem with NIC is that it is a tax on earnings. Historically, earned income was always taxed at a lower level than unearned income, with things like earned income relief (before 1973) and investment income surcharge (before 1979 (?)) I think I may have given my age away here!

Now we have the situation where unearned income is taxed at the lower level, hence the current trend to low salaries and payment of dividends.

The other problem is that the government promised not to put up income tax, so has put up almost everything else!

In other areas, the jump from basic to higher rate tax is too wide. When the new system was introduced in 1973, the basic rate of tax was 35%, with higher rates from 40 to 83%, so higher rate taxpayers started with a gentle increase of an extra 5%. Now it's a huge 18% difference.

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By NeilW
29th Nov 2005 12:55

Complexity
If the chancellor had any idea how complicated the NCD system was he would NEVER have introduced it.

If the chancellor had realised how complex it was, then he'd have probably introduced it across the board. This chancellor likes complexity because he thinks it shows how clever he is at 'targetting'. More complexity equals more people doing the processing equals more jobs. It's Keynesian economics by stealth.

The people who do well out of it are the lawyers, accountants and of course HMRC in penalties and fines.

NeilW

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29th Nov 2005 12:12

Abolish NCD's
If the chancellor had any idea how complicated the NCD system was he would NEVER have introduced it. I am sure that none of the small businesses which I deal with understand it and many try and shoot the messenger (us) when we tell them of their liability to Corporation Tax on very small profits. "I thought I had the first £10,000 free of tax" they say. Ha Bloody Ha

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