The Phoney War
Despite a lot of political posturing, when it came to the big battles on tax reforms it looks like we are going to have to wait for the “Emergency Budget” after the general election to see any real action.
Indeed this Budget more than lived up to its billing as a minimalist affair. For most taxpayers the only really noteworthy event was the increase in the personal allowance and the increase in the basic rate band, meaning that the starting point for higher rate tax is income of £42,385 from April. Just how much that saves you depends on so many factors these days, such as the clawing back of Child Benefit and the loss of the personal allowance at higher levels of income. Nonetheless most of us will pay at least a little less tax next year.
Pensions continue to be tightened up and there were some technical changes to capital gains tax that business owners should review, plus a few tweaks on inheritance tax and a welcome tightening up of anti-avoidance measures.
We were told that the annual tax return is to be abolished, and this will clearly relieve many of the straightforward cases from the burden of completing an annual tax return. It is no doubt a popular move, although it will take some years to become reality, being phased in by 2020 and much of the detail has yet to be published. HMRC will need to get their act together if their systems are to be capable of managing what is being proposed, given their recent errors with tax calculations and PAYE Coding Notices.
It has been suggested that taxpayers’ bank accounts will be linked to their “digital tax record”, enabling HMRC to take any tax owing directly from it.
Agents will be able to manage their clients’ digital accounts. So those with less straightforward tax affairs, and those who prefer to rely on professional advice to ensure their tax obligations are met and to seek advice on wider tax planning matters will continue to rely on the services of their professional adviser.