Chancellor's options that could affect Business
|Category|| 2002 Releases
|Author||Lisa Drackley - Communication
Press Release of 12 April 2002Contacts:
John Whiting: 020 7804 4422 (O); 07710 027 595 (mobile)
Viv Rees: 020 7245 4109 (O); 07900 220887 (M)
The Chartered Institute of Taxation, CIOT, thinks the Chancellor has many options if he wants to raise taxes to expand public services.
John Whiting, CIOT President said:
“The Chancellor will not be able to raise large sums by fiddling around with allowances and thresholds. There are a number of options he can choose from, but whatever changes are made, the Institute asks that they should move towards a tax system which is simpler to understand and simpler to administer. There should be full consultations on any proposed changes.”
Three possible options identified by CIOT currently include:
- A tax cut, with an increase in the amount of income subject to the 10% “starter rate”
· Raise the rate at which people pay NICs – normally 10%
· Raise the level at which you currently stop paying NICs – currently £585 a week
Areas of possible tax changes that could affect business include:
NIC / Payroll Aspects
If NIC rises occur we ask that sufficient thought be given to:
· How the burden falls on different income groups so that it is both fair and simple
· The interaction with other taxes, and in particular income tax. Any change should move us closer to harmonising NICs and income tax rather than the opposite
· The timing of implementation, so as to allow employers to update their systems.
· It is important that full regard is given to payroll administrative burdens.
· The introduction of an optional flat-rate scheme confirmed on 28 March does not really help to ease small businesses into the VAT system. There remains the “cliff edge”; one day a business is outside the VAT net, the next it may be required to add 17.5 % to its prices.
· If the standard rate of VAT rises, it makes it even more vital to spend more time looking at whether something falls into Standard Rate, Lower Rate or Zero Rate
· Tax computations should be simplified: one immediate recommendation is that the separate write down for “expensive cars”(costing £12,000 and over) should be removed
· Premiums on keyman insurance policies should be allowed where the insurance is required by a lender as a condition for the making of a business loan. This unavoidable cost of raising business finance is currently disallowed.
The CIOT has also issued releases on possible Budget changes that could affect personal taxation and on some imaginative ideas that 15-17 year olds have for the Chancellor.