Simplifying the UK Tax System - where to start
The new Chancellor of the Exchequer is unlikely to read this website or our Blogs, but who knows?...Mr Javid recently spoke of the desirability of simplifying our incredibly complex tax system. I'm going to offer him three starter Tips...
1. There are two PAYE Reference for every employer. A PAYE Reference number for submission of Returns and a PAYE Accounts Office Reference number for making payments. This causes immense confusion to business owners. We recommend the abolition of the PAYE Accounts Office Reference number and the use of the PAYE Reference number for all communication and payments
2. The Married Allowance is only available if a Spouse has income under the Personal Allowance £12,500 and if the other Spouse is a Basic Rate Taxpayer. It is worth £230 per year to a qualifying couple. It is not given by HMRC. It has to be applied for, and the application process is cumbersome and difficult. We recommend its abolition and the automatic gifting of a new Married Allowance to all legally registered couples.
3. IR35 is an arcane complex set of tax rules seeking to tax the owners of some companies as if they were employees. HMRC saw an unfair tax advantage for companies compared to individuals working on single contracts, and that is a reasonable analysis, but what's been created is unworkable for both HMRC and relevant taxpayers. A simpler solution would be to increase either the Corporation Tax Rate or the Dividend Tax Rate for individuals.
If you are affected by any of the above, or confused about any tax matter, please do contact us and we can offer you a jargon free explanation.