Tax simplification ideas

By Carol Barrie on Oct 1, 08 02:43 PM in Tax

As promised in my blog yesterday, I outline my "Simpler tax ideas".

Everyone acknowledges that we all have to pay taxes to fund the running costs of the country. The highly complicated nature of those taxes puts unnecessary pressure on business and there is increasing evidence that businesses are leaving the UK to find friendlier regimes. Furthermore, respective entrepreneurs are being put off setting up in business at all by the tax regime and bureaucratic red tape in the UK.

The Government has to do something about this now, if the competitiveness of the UK is to be maintained as a place to do business, in what is now a "global market place".

My suggestions below make for a much simpler approach, leaving businesses to concentrate on what they do best - building a great industrious and prosperous country (fighting off the tumultuous financial battles that lie ahead for all - just to survive).

I will be sending my suggestions to Neville Reyner at the British Chambers of Commerce and to Philip Hammond MP in a bid to indeed make tax simpler for all business.

Abolish Road fund Licence and put everything on petrol tax.
Increase the VAT threshold to £250,000. Better still, abolish VAT and introduce a sales tax at the retail level. It is acknowledged that either of these measures would create problems with the EU but VAT is such a burden administratively that changes have to be worthy of consideration.
Abolish IHT and impose CGT on death on any inherent gains - spouse could be protected by normal CGT rules which ensure that assets pass between spouses at their CGT base cost. Being able to pass more wealth to the next generation is a great incentive to wealth creation and an entire tax would disappear from the statute books.
Increase SDLT exemption to £350k and tie it into the building price index. 3% on everything above this.
Abolish NIC by combining it with income tax. Introduce employers' social security/payroll tax at current rate of employers NIC.
Capital gains tax rate to be 30% but reduced by one twentieth per annum for every year of ownership of a non-business asset and one tenth per annum for every year of ownership of a business asset. Annual exemption to be increased to £25,000 per annum. Thus CGT is effectively abolished for business assets after 10 years and for non business assets after 20 years and there is some recognition of the effects of inflation in the meantime. Once again a great incentive to grow a business and a much simpler CGT system.
Allow accounts depreciation for tax purposes subject to avoidance safeguards. Abolish capital allowances.
Exempt foreign dividends from UK tax subject to avoidance safeguards.
De minimis in tax year write off for small capital expenditure items costing £250 or less (£5,000 for quoted PLCs), provided the profit and loss account 'hit' is taken. Limits to be inflation proofed.