The tax system in the UK is complicated and many business leaders argue that it is still due for radical reform.
As the new Chancellor Philip Hammond prepares for his first Autumn Statement to Parliament on Wednesday 23rd November, McBrides Chartered Accountants have put together a list of 11 tax reforms they say that business and individuals would like to see included. The 11 point plan called #11for11 is being tweeted daily from Monday 12th September by the accountancy firm based in Sidcup, Kent.
Managing partner Nick Paterno says: “we listen to our clients speak daily about the trials and tribulations they face from a tax system that needs radical reform and improvements and so with a new man in the ‘hot seat’ at number 11 Downing Street we thought it an opportune moment to share our clients pleas as an open letter on twitter #11for11 #DearMrHammond.”
Some of the key proposals put forward by McBrides Chartered Accountants include simplifying VAT, and withdrawing the employment allowance and instead giving employers a period free from NI contributions on new employees.
Nick Paterno says: “The Employment Allowance is a waste of money. This measure was introduced by George Osborne in 2014 to give £3,000 to almost every single employer in the country against their national insurance bill. It was designed to encourage greater employment, but can anyone really see Marks & Spencer, BP, Barclays et al employing more people because the Government has just given them a £3,000 ‘freebie’ with no effort at all? The rate was increased from £2,000 to £3,000 in 2016 and the cost of that change alone was estimated at £650m for just one year. Surely something more targeted would work better and perhaps not cost so much. How about a 12 or 6 month employer’s NI holiday for SMEs on new members of staff? We haven’t got the detail to work the costings but there must be a more effective incentive available for the same cost.”
McBrides are also calling for the new Chancellor to reform an Inheritance Tax (IHT) allowance which has remained unchanged for 35 years: the team are asking for the Chancellor to increase the annual exemption for gifts for IHT purposes from its current £3,000 level, arguing that thirty five years ago £3,000 would have been the equivalent of over £11,600 in today’s money!
- Actually get on and amalgamate national insurance and income tax
- Withdraw the wasteful employment allowance and give employers a period free from NI contributions on new employees.
- Reinstate the personal allowance for individuals with income in excess of £100k, and recognise that this has encouraged people to restrict their income.
- Provide some certainty as to how pension fund tax reliefs will operate in future.
- Increase the annual exemption for gifts for Inheritance Tax purposes from its current level of £3,000, at which it has been set for at least 35 years!
- Simplify the Enterprise Investment Scheme (EIS) and Seed EIS (SEIS) qualifying rules.
- Scrap higher rate income tax relief for charitable donations (Let’s keep the basic rate relief, which goes back to the charity, but let’s use the otherwise higher rate tax relief for some other worthy Government cause like the NHS!)
- Extend Research and Development (R&D) tax reliefs to partnerships and sole traders.
- IHT again – forget the phasing of the planned introduction of a residence allowance and do it now!
- Simplify VAT
- Reform HM Revenue & Customs
Nick Paterno added: “we hope that the new Chancellor will listen to business leaders and to SME’s who not only face the uncertainty of Brexit but also have to tackle unwieldy tax rules which are well overdue for reform.”
The full letter can be viewed below and at McBridesllp.com