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Allowances on late-night taxis, luncheon vouchers and the renovation of business premises are among those the Office of Tax Simplification (OTS) has recommended for abolition.
In its final report from its review of 155 of the UK’s 1,042 tax reliefs, the OTS has named 47 that ought to be axed, while 37 more ‘should be looked in to in more detail’; 54 reliefs have been ringfenced as acceptable, and 17 others – including the enterprise investment scheme, venture capital trusts, entrepreneurs’ relief and surplus advance corporation tax – have been highlight as needing simplification so that administrative burdens can be lessened.
The OTS’s recommendations – which include a case for a 'top down review' of inheritance tax and its 89 associated reliefs, many of which are cited as being 'integral to the operation of the tax' – have been presented to the chancellor, George Osborne, for consideration.
They are intended as ‘revenue neutral’ proposals, although the office believes ‘the costs to the taxpayer of the reliefs recommended for abolition are balanced by the cost to the Exchequer of widening some other reliefs, and… suggestions for substitutions, which will deliver simplification dividends’.
There remain 883 tax reliefs that have not been scrutinised.
OTS tax director John Whiting said, ‘It’s clear that many of the reliefs are valuable and clear in their purpose and operation, so we have not sought to change them, but others need simplifying or extending to be properly effective. Some have simply expired and have no further use; a number are poorly targeted leading to negligible value, or their benefit is outweighed by the administrative burden in using them.
‘We’ve had to make some hard choices to give us a manageable list to review at this stage, but we hope that the recommendations… represent a commonsense approach and would help to ease the burdens of the more useful tax reliefs on those that use them.’
The OTS will now focus on its review of taxation for small business, which will include an exploration of the aligning of income tax with National Insurance. An interim report is due shortly.
