Introduction »

Complex but changing

One of the Government’s early actions in July 2010 was to establish the Office of Tax Simplification (OTS) to provide independent advice on how to reduce the complexity of the existing tax system. The Chancellor even stated in his Budget 2011 speech that:

‘Our tax code has become so complex that it recently overtook India to become the longest in the world!’

The initial task of the OTS was to carry out two reviews. The first was to list all reliefs, allowances and exemptions applying to businesses and individuals and identify those reliefs that should be repealed or simplified to support the objective for a simpler tax system.

Following the publication of the initial report the Government intends to abolish 43 tax reliefs whose rationale is no longer valid. A minority of redundant reliefs will be repealed in Finance Bill 2011. The other reliefs will be removed after consultation.

The second task was to identify the areas of the tax system that cause the most day-to-day complexity and uncertainty for small businesses and recommend priority areas for simplification. That initial report has resulted in the announcement that the Government will consult on the integration of the operation of the income tax and national insurance systems. This major structural change will take time to properly consider but we will keep you updated on any important developments.

Introduction »