Jeremy Hunt urged to reform ‘unfair stealth tax’ that hits struggling families in budget | Personal Finance | Finance

0
59


Chancellor Jeremy Hunt should use his Spring Budget statement to reform an “unfair” stealth that hits working families in the pocket, an expert has said.

Chris Campbell, head of Tax at ICAS (Institute of Chartered Accountants of Scotland), said there will likely be tax policy changes as this may be the last fiscal event be the General Election.

He said the Chancellor should look at reforming the threshold for the High Income Child Benefit Charge, which is currently at £50,000.

Mr Campbell said: “HICBC is often seen as an unfair tax charge, as it can put added strain on single parent households and householders where one taxpayer has net income above £50,000 and the other adult in the household has a low income.

“A single parent with an income of £60,000 would have all their child benefit withdrawn via HICBC. However, a two-adult household with a higher overall household income would receive full child benefit, as long as neither taxpayer has an individual income of more than £50,000.

“An increase in the threshold would address what has been a stealth tax on middle income earners (as wage inflation since 2013 has brought more taxpayers into HICBC) could have a significant and positive impact on struggling families’ finances.”

Mr Campbell also urged the top taxman to look at ways to “simplify” the tax system in the budget.

He said: “Recent fiscal changes, including freezing of thresholds, reducing the dividend allowance and reducing the capital gains tax annual exemption have increased the number of taxpayers who need to register for income tax self-assessment.

“Taxpayers with rental income covered by the personal allowance still need to submit a tax return, even though they don’t have to pay income tax.

“To avoid similar issues in future, we want to see a regular review of exemptions for small amounts of income/gains and these should be increased/indexed so that they are not eroded over time.

“Simplifying the tax system, and introducing long-term tax planning will create certainty for individuals and businesses, which is key to driving sustained economic growth.”

Nigel Holmes, director of Research and Development at Ryan, also told Express.co.uk the Chancellor should look at cutting taxes.

He said the VAT registration threshold should be raised from the current £85,000, as many small businesses avoid earning over the threshold so they don’t have to increase their prices to pay the tax.

He also said tax relief for research and development should be reformed to encourage business innovatio. He explained: “There is a lot of discussion around legitimate claims being declined.

“This is concerning as it could deter some businesses from making a claim, or participating in R&D altogether. More needs to be done to make the process easier for businesses to understand and simpler for them to claim the reliefs that they are entitled to.”

For the latest personal finance news, follow us on Twitter at @ExpressMoney_.



Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here