Continue reading

Recommendations for simplifying tax for individuals

Robin Williamson examines the Office of Tax Simplification’s key recommendations for simplifying tax from its Taxation and Life Events report – he covers childbirth, working life, saving for a pension, helping others and tax education and awareness.

The Office of Tax Simplification (OTS) released its Taxation and Life Events report in October 2019. It focuses in a practical way on individuals’ experience of the tax system when going through important life events such as childbirth, starting in work or changing jobs, saving for or drawing a pension, and taking care of those who are less able to manage their own tax affairs. In all the report makes 15 main recommendations and a number of suggestions as to how administrative processes might be improved in ways designed to make things easier for individual taxpayers.

The report begins at the very start of the life cycle, with the tax complexities surrounding childbirth, where the advent of the high income child benefit charge (HICBC) has been accompanied by a fall, year by year, in the numbers claiming child benefit, amounting to about 600,000 since 2012. The fall may well be due to families where at least one individual has earnings within the HICBC income bracket deciding to avoid HICBC altogether by simply not claiming child benefit. But the danger with this course of action is that child benefit is linked to certain national insurance entitlements – the claimant can get national insurance credits for periods when they are not working until the child reaches 12 years of age, and claiming child benefit ensures that the child is sent a national insurance number when they are 16. These entitlements are lost if the benefit is not claimed.