Worked for Inland Revenue for 11 years in the 70s and 80s before I saw the light!
Progressed from working for medium sized firms of accountants to starting my own practice in 1996 and havent looked back since, with hubby joining me in partnership 7 years later.
As CGT is mostly a "voluntary" tax I'm a firm believer in going back to a simple flat rate - possibly of 30%. It would certainly make life easier for those currently having to guess at their level of income when declaring residential gains. But please increase the annual allowance to a reasonable amount! Pensioners with small shareholdings don't know how to calculate gains on shares they may have held for a long time and company reorganisations may result in unexpected gains (Glaxo demerger last year is an example I have had to deal with recently).
I presume HMRC already have the ability to check spouses income as they already do so when claims for the marriage allowance to be transferred are made?
Disappointed that there was nothing at all for pensioners but I suppose that is because we had the triple lock increase. It still means that more pensioners are going to be paying tax though and potentially trying (unsuccessfully?) to deal with HMRC!
and do they know how many attempted to use the service and failed because their questions weren't understood? I've tried twice and even using simple words they just didn't get it..
I thought we all had to work until we are 70...... ish.
I am 71, so it is definitely time to go! I've been hanging on to a few pensioners and high earners but think I've had enough, even though most of them won't be in MTD.
I started my careeer in tax in 1973, so remember most of these changes!
It's hard to believe that such a small percentage of the population pay CGT, given how many property (and to a lesser degree, share) disposals my small practice has dealt with over the years. When the UK property reporting "service" was first introduced I remember asking why we couldn't go back to a fixed rate of tax, making it much simpler to calculate the tax due. I have already had three clients overpay using the service as predicting income early in the year can be difficult, especially when clients are self-employed. Going back to a single rate of tax would certainly simplify matters.
Incidentally, can anyone tell me how we go about getting a refund when the overpaid CGT can't be offset, other than writing to HMRC? I have scoured the internet but can only find the temporary guidance issued for 2020/2021 and a letter is likely to take months to be dealt with.
Having experienced the consequences of having a pensioner client removed from the SA system, as she had only pensions and savings interest, I totally agree with David. Interest rates have shot up over the last year or so and so many more people will need to pay tax. Pensioners in particular struggle to deal with HMRC - most of my pensioner clients (and I have quite a few) are unwilling or unable to set PTAs and so turn to me for help.
The lady who was taken out of SA received P800s every time HMRC received an interest figure from one of her banks and as she had several different accounts that meant at least four calculations. Her tax code kept changing as a result and she was thoroughly confused about what she owed and when she would need to pay it.
After making several telephone calls to the ADL to try and sort the situation out, I agreed with the client that she should go back into SA so that she would have certainty over the tax due and we asked HMRC to remove the interest from her tax code, to stop the constant changes. I now charge her a nominal fee for preparing the return, which takes a lot less of my time than spending hours on the phone to her and HMRC.
I deal with many pensioners and most have income from savings and shares:
1. Not everyone is willing (or able) to go online to check their own tax code.
2. Even if they do, they will probably not understand the entries in it (otherwise why do so many clients ask me to check theirs).
3. Tax codes are inevitably always based on out of date information, which may not be updated for many months - some banks are really slow at sending out the information about savings interest.
4. The delays in interest figures being produced can result in multiple code changes during the year.
5. HMRC cannot tell what dividends taxpayers (sorry, "customers") receive unless they ask for the information or it is volunteered.
For all of these reasons, I encourage pensioners to stay within the self assessment system and only charge them a small fee for the returns. I had one client removed who had around six coding notices issued as they were changed every time HMRC received bank details and I wasted a lot of time phoning up to get the codes changed. She also got thoroughly confused about the resulting under- and potential underpayments and in the end we decided it would be far better for her to resume completing tax returns, which gave her certainty and confidence in the amounts she was being asked to pay.
My answers
As CGT is mostly a "voluntary" tax I'm a firm believer in going back to a simple flat rate - possibly of 30%. It would certainly make life easier for those currently having to guess at their level of income when declaring residential gains. But please increase the annual allowance to a reasonable amount! Pensioners with small shareholdings don't know how to calculate gains on shares they may have held for a long time and company reorganisations may result in unexpected gains (Glaxo demerger last year is an example I have had to deal with recently).
I presume HMRC already have the ability to check spouses income as they already do so when claims for the marriage allowance to be transferred are made?
Disappointed that there was nothing at all for pensioners but I suppose that is because we had the triple lock increase. It still means that more pensioners are going to be paying tax though and potentially trying (unsuccessfully?) to deal with HMRC!
and do they know how many attempted to use the service and failed because their questions weren't understood? I've tried twice and even using simple words they just didn't get it..
I am 71, so it is definitely time to go! I've been hanging on to a few pensioners and high earners but think I've had enough, even though most of them won't be in MTD.
Thanks Helen.
I started my careeer in tax in 1973, so remember most of these changes!
It's hard to believe that such a small percentage of the population pay CGT, given how many property (and to a lesser degree, share) disposals my small practice has dealt with over the years. When the UK property reporting "service" was first introduced I remember asking why we couldn't go back to a fixed rate of tax, making it much simpler to calculate the tax due. I have already had three clients overpay using the service as predicting income early in the year can be difficult, especially when clients are self-employed. Going back to a single rate of tax would certainly simplify matters.
Incidentally, can anyone tell me how we go about getting a refund when the overpaid CGT can't be offset, other than writing to HMRC? I have scoured the internet but can only find the temporary guidance issued for 2020/2021 and a letter is likely to take months to be dealt with.
Having experienced the consequences of having a pensioner client removed from the SA system, as she had only pensions and savings interest, I totally agree with David. Interest rates have shot up over the last year or so and so many more people will need to pay tax. Pensioners in particular struggle to deal with HMRC - most of my pensioner clients (and I have quite a few) are unwilling or unable to set PTAs and so turn to me for help.
The lady who was taken out of SA received P800s every time HMRC received an interest figure from one of her banks and as she had several different accounts that meant at least four calculations. Her tax code kept changing as a result and she was thoroughly confused about what she owed and when she would need to pay it.
After making several telephone calls to the ADL to try and sort the situation out, I agreed with the client that she should go back into SA so that she would have certainty over the tax due and we asked HMRC to remove the interest from her tax code, to stop the constant changes. I now charge her a nominal fee for preparing the return, which takes a lot less of my time than spending hours on the phone to her and HMRC.
Absolutely disgraceful!
I deal with many pensioners and most have income from savings and shares:
1. Not everyone is willing (or able) to go online to check their own tax code.
2. Even if they do, they will probably not understand the entries in it (otherwise why do so many clients ask me to check theirs).
3. Tax codes are inevitably always based on out of date information, which may not be updated for many months - some banks are really slow at sending out the information about savings interest.
4. The delays in interest figures being produced can result in multiple code changes during the year.
5. HMRC cannot tell what dividends taxpayers (sorry, "customers") receive unless they ask for the information or it is volunteered.
For all of these reasons, I encourage pensioners to stay within the self assessment system and only charge them a small fee for the returns. I had one client removed who had around six coding notices issued as they were changed every time HMRC received bank details and I wasted a lot of time phoning up to get the codes changed. She also got thoroughly confused about the resulting under- and potential underpayments and in the end we decided it would be far better for her to resume completing tax returns, which gave her certainty and confidence in the amounts she was being asked to pay.