OTS review targets 44 reliefs for chop

The Office of Tax Simplification has targeted 44 tax reliefs for elimination, plus 17 more that should be simplified.

The OTS Review of Tax Reliefs final report, published on 3 March, detailed its conclusions on 155 separate tax reliefs (out of the 1,042 that it identified last year in its first official publication). While recommending that 54 reliefs are retained without change, the tax reformers led by CIOT’s John Whiting recommended 44 reliefs for the chop (Or is it 45? there is a minor discrepancy in the text - ed); and simplification for 17 others. Two reliefs - on approved profit sharing schemes and Trustee Savings Banks income - have already been repealed , but still lurk in neglected corners of the tax code.

However the OTS report shirked some of the most regularly cited simplification suggestions, including merging income tax and National Insurance Contributions, but set out what it called “themes” for further study and consultation:

• Income tax and NICs 
• VAT reliefs
• Employee benefits
• Capital gains tax
• Inheritance tax and trusts 

Reliefs targeted for simplification include:

• Small company allowances
• Capital allowances
• Capital gains tax
• Real Estate Investment Trusts
• Lease Premium Relief

For the full list of those recommended for abolition, consult chapter 4 of the OTS Reliefs Review final report.

The chancellor is likely to publish a formal response to the OTS alongside the Budget 2011, but the OTS does not expect any immediate changes to reliefs, except perhaps for the abolition of some obsolete reliefs. Any proposals that the government does plan to take forward would not appear until the Finance Bill 2012, at the earliest.

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