The OTS has now identified 47 out of 1,042 tax reliefs that could be abolished and a further 17 that could be simplified. It’s long awaited report was published last Thursday.
One of the reviews that it recommends scrapping is the concession on Advanced Corporation Tax payments that have already been made. Large organisations may be requested to forgo part of the £1.5 billion that has already been remitted to the Treasury and which is slowly being claimed back in reliefs after the abolition of the tax 11 years ago.
The tax director of the OTS, John Whiting, said that on the one hand we have companies expecting £1.5 billion and on the other, the Treasury with a notional liability of £1.5 billion. It would make more sense to stop it. In a moment of humour, he said ‘Let’s call it £50 and a couple of drinks!’
The salary threshold of £8,500, used to determine whether some employee benefits are taxable, should go, the OTS suggested. The threshold has been the same for more than 30 years and since the personal tax allowance will soon reach £10,000, there is little point in retaining the relief.
Among other suggestions is one that a relief of £30 million set aside for blind people might be cut as two thirds of eligible people do not claim.
The OTS isn’t suggesting that all reliefs be changed to favour the government; far from it. One idea that should win support from entrepreneurs and freelancers is to do away with the rule that business owners must have a 5% shareholding before they can qualify for the 10% Entrepreneurs Relief capital gains tax rate. Another is to double the capital gains relief to £12,000 on the sale of antiques and paintings.
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