This guest post is by TaxHelp for Older People (TOP), a charity offering free tax advice to older people on incomes below £17,000 a year. The Helpline number is 0845 601 3321.
Why, you growl, does tax have to be so complicated? Do you feel a strong urge to put a brick through the television screen when you hear that line?
Well, a lot of the answer lies in history. We have income tax because it was introduced as a temporary tax over 200 years ago to help defeat Napoleon. We have a tax year which strangely runs from 6 April to the following 5 April because we lost 11 days in changing the calendar from the Julian to the Gregorian in the 18th century (and there were riots because people thought they were going to die 11 days earlier).
We have a Pay As You Earn system set up during the Second World War when the husband worked at the same company a mile down the road for 50 years while his wife stayed at home, made steak and kidney puddings and did the laundry on Mondays (and only 25% of the population paid tax – halcyon days).
Nowadays, the husband has had 9 different jobs in his working life and ends up with 4 different pensions plus his state pension, and the wife stopped paying the married women’s stamp and gained state pension entitlement in her own right, and has been able to join company pension schemes.
We have a tax system where successive Chancellors have added, subtracted and tweaked without a radical overhaul of the structure, resulting in complicated taxation.
We pay tax on working hard but not for winning on the horses, we pay different rates of VAT depending on how frail we are, we get relief for being married but only if we are ancient enough, we pay different rates of tax on our savings depending on how impoverished we are, we get allowances for being blind but benefits for being arthritic, our personal allowances vary according to both our age and our level of income, we pay our taxes through PAYE or self-assessment – or both, the rates of tax wander from 0% to 60% via 5, 10, 18, 20, 22.5, 28, 30, 32.5, 40, 42.5, 50 & 55 and that’s ignoring the disguised tax called National Insurance Contributions…
Still keeping up? Good, because the Government have set up an Office of Tax Simplification (OTS) to examine taxation and make recommendations for simplifying the system.
Better, because the OTS would welcome thoughts and contributions from you, however heretical, to assist their deliberations.
The Office is currently looking at pensioner issues, so now is the time for a bit of Grey Power. Go on, put quill to parchment or digits to keyboard.
Now is your chance to make a positive contribution to making tax less taxing. You can e-mail your ideas direct to them on email@example.com or if you prefer, you can send them to us via the post at TaxHelp for Older People, Pineapple Business Park, Salway Ash, Bridport, Dorset DT6 5DB and we will undertake to forward them to OTS.