The Office of Tax Simplification (OTS) has published a report on how to simplify UK tax reliefs. It’s a long document which takes a while to rifle through, which is surely a good thing (or not, depending on how much you like reading about complex financial and legal issues).
The biggest revelation is less a recommendation than a pseudo-pre-recommendation recommendation. The report suggests that merging National Insurance and Income Tax would be a practical way of simplifying the tax system. However, this needs to be examined in greater detail and so will feature in their Small Business Review. This will also include a review of IR35.
John Whiting and his cohorts at the OTS have certainly been busy. They’ve taken a long, hard look at 155 tax reliefs and decided that:
- 47 should be scrapped
- 17 should be made simpler
- 37 should be explored in more detail
- 54 should be left alone
Among those recommended for the axe:
- Cycle to work days where food provision is provided free of tax.
- The late night taxi relief
- Business premises renovation allowance
Among the reliefs recommended for simplification, are:
- Entrepreneurs relief – for this, the OTS suggests providing a simple checklist to guide an individual as to whether or not they qualify.
- Prinicipal private residence relief
- Real estate investment trusts – currently subject to a separate review
- The four reliefs covering the enterprise investment scheme
John Whiting, Tax Director for the Office of Tax Simplification reflected on the findings:
“It’s clear that many of the reliefs are valuable and clear in their purpose and operation, so we have not sought to change them, but others need simplifying or extending to be properly effective. Some have simply expired and have no further use; a number are poorly targeted leading to negligible value, or their benefit is outweighed by the administrative burden in using them.
“We’ve had to make some hard choices to give us a manageable list to review at this stage, but we hope that the recommendations we have put forward today represent a common sense approach, and would help to ease the burdens of the more useful tax reliefs on those that use them.”
Hopefully, freelancers will find more of interest in the Small Business Review which, along with looking at the merger between Income Tax and National Insurance in more detail, will also make recommendations regarding IR35.
The OTS was set up on 20 July 2010 with the task of untangling the ‘spaghetti bowl’ of tax legislation into a kind of Alphabetti Spaghetti – easily digestable and thoroughly understandable. Even for infants. Allegedly.
