The Office of Tax Simplification (OTS) has published a paper exploring ways of simplifying the taxation of individuals’ savings income.
The OTS paper, which looks at the taxation of people’s savings income and identifies areas that might be simplified, explains that for many savers the UK tax system works well, as 95 per cent of people don’t pay tax on savings income.
However, aspects of the regime are complicated, difficult to understand, and can produce anomalous outcomes, with many taxpayers continuing to worry that they will be taxed on their savings income, leading to misunderstandings and confusion.
The report identifies nine areas where further work would be beneficial, including:
- a review of the various savings rates and allowances, and the interactions between them, to identify options to streamline the income tax calculation;
- drawing up a personal tax roadmap to clearly set out the government’s vision for personal taxation, including plans for savings income;
- improving guidance on the taxation of savings income, particularly on the treatment of pension lump sums, an area of particular confusion;
- simplification of ISAs, including a review of the rules on withdrawals from the Lifetime ISA.
If you have any concerns or queries relating to the paper, or to find out how we can help you put extra money in your pocket at tax time, contact a member of our specialist tax team. We work across a broad range of sectors, advising entrepreneurial people with business ideas and an appetite for financial growth. Our tax specialists, some of whom are former HMRC Inspector of Taxes, are well versed in dealing with all types of tax issues.
Whether you are looking to save on income tax, capital gains tax, inheritance tax, or all three, there are various legitimate tax planning opportunities available to you.
For more information, please contact your usual Beavis Morgan Partner.
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