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Tax reforms
Regarding your article ‘Tax reform proposals need to be more joined up’ (Nov 25).
The chancellor has made the right noises and has the opportunity to do some real good in not only making taxes fairer, but also in the way that he begins to raise the extra taxes necessary to repay the country’s escalating debts.
It seems likely that capital gains tax will be reorganised. There is a good reason to retain the annual exemption at current levels to encourage share ownership with the associated risk, but I can see the tax being charged as an addition to income, albeit with indexation relief.
There is no reason to charge a higher rate on buy-to-lets or to restrict the income tax relief on loan interest to basic rate.
The 7.5 per cent dividend surcharge is unfair on genuine share market investors who have done no wrong and are supporting our quoted companies: it should be scrapped.
The general public does not seem to realise that the NI for an employed person totals over 25 per cent, part paid by the employee and part paid by the employer as part of employment cost.
Those who are reporting self-employed profits to HM Revenue & Customs pay only 10 per cent or so.
An increase to 20 per cent would be reasonable with some increase in the benefits available to them.
Employee NI could/should be applied to the dividends of worker/director shareholders, albeit with a top limit of, say, £50,000 actual or deemed remuneration.
It would be reasonable to limit pension contribution relief to basic rate only with the relief being granted automatically.
On the other hand, the lifetime allowance is ridiculously low and unrealistic.
I see no reason to have a limit as long as there is a limit on annual contributions.
Wouldn’t it be good and simple if Isas and pensions were merged within combined annual contribution limits?
Let’s get rid of the highly complicated residential property nil rate band and instead set the personal nil rate band at £400,000 followed by the current 40 per cent charge or a tired structure from 20 per cent up to 50 per cent. Business property relief and agricultural property relief need to be retained to encourage entrepreneurs.
Income tax: There’s some historic, smallish complications that could go in order to simplify and increase revenue a little, for example, the starting rate.
The complication surrounding dividend taxation should go.
Gary Starmer
Kingston Personal Tax Management
