In what is expected to be a very short Budget, The Chartered Institute of Taxation, CIOT, is urging the Chancellor to help employers and employees who are facing increased national insurance contributions from 6 April. Contact: Viv Rees, Head of Communications: 0207 245 4109 (O)
Press Office: Penny Finch; 020 7235 9381.
In what is expected to be a very short Budget, The Chartered Institute of Taxation, CIOT, is urging the Chancellor to help employers and employees who are facing increased national insurance contributions from 6 April.
Penny Hamilton, CIOT President, said:
“Even with £2bn going out in tax credits, the Chancellor is gaining over £8 billion from increased NIC contributions. This year we hope that the Chancellor does more to help business by actively cutting the tax administrative red tape and that he will resist the temptation to add extra layers of administration and tinker with the system. He needs to make the tax system simpler to comply with.
“We welcome the new family-friendly tax credits system. We now need to see if all the people who are entitled to the new credits claim them, and, when they claim, if the new system works. We do hope that everyone realises that under the new system there is little provision for backdating of claims whereas the old scheme allowed for five year backdating. People must get their claims in as soon as possible.”
In a year when there are significant changes resulting from the integration of tax and benefits through the new tax credits scheme, the CIOT would like to see the Chancellor focus his attention on helping business:
- Reform the Schedular system for corporation tax purposes, so that there is only one “source” for all of a company’s commercial transactions. This would simplify the tax computations and allow more flexible relief for tax losses.
· Eliminate the remaining “tax nothings.”
· More progress on the alignment of tax and accounting rules in order to simplify tax computations, provided that the accounting rules make sense for tax purposes.
· Resist any temptation to tinker with the tax system for minor policy reasons that only increase businesses’ administration and yield little gain for the Treasury.
· Allow tax relief for premiums on insurance policies made to secure business loans (keyman insurance policies).
· Simplify tax computations on cars by removing the £12,000 limit on expensive cars.
· Extend tax credits beyond pure research to the development of new ideas into production.
· As part of the modernisation of Stamp Duty, abandon the charge on short-term leases and the general charge on a multiple of rents.
· Extension of 100% tax relief for small businesses that have invested in information and communications technology for genuine business reasons.
Indirect Tax: Introduce as soon as possible:
· A graduated relief scheme to ease small businesses into the VAT system.
· Simplification of the boundaries between what is liable to VAT at the standard, reduced and zero rates and what is exempt from VAT.
· A commitment to increase the number of businesses eligible to use the VAT flat-rate scheme.
· A commitment to consider the consolidation of the administration, collection and enforcement provisions for VAT, Insurance Premium Tax, Landfill Tax, Climate Change Levy and Aggregates levy into one Indirect Taxes Management Act.
· Replacement of bingo duty with a gross profits tax.
· Smooth implementation of the new tax credits scheme with a goal of increasing take-up to nine in ten eligible families
· Raise the £250,000 level at which Inheritance Tax, IHT, comes into force so as to move it in line with the rise in house prices over the last few years – a change that the CIOT has been calling for.
· No implementation of the suggested “reform” to the taxation of life policies, as recommended by the Sandler Review. We think that the existing 5% rule is simple, encourages savings through this type of product, and should not be changed.