Tax reliefs under scrutiny
The Office of Tax Simplification is recommending the abolition of almost 50 tax reliefs.
In its review of over 150 reliefs, the final report on which has been submitted to the Chancellor, the OTS suggested that 54 remained unchanged and that 47 be scrapped. A further 17 should be simplified, while the remainder require further examination.
Of those that could be simplified, the OTS proposed that the rule which demands a 5 per cent shareholding in order for business owners to qualify for the 10 per cent entrepreneurs’ relief rate of capital gains tax be dropped.
The report also suggested introducing a checklist for the four reliefs covering the enterprise investment scheme.
John Whiting, tax director for the OTS, said: “It’s clear that many of the reliefs are valuable and clear in their purpose and operation, so we have not sought to change them, but others need simplifying or extending to be properly effective. Some have simply expired and have no further use; a number are poorly targeted leading to negligible value, or their benefit is outweighed by the administrative burden in using them.
“We’ve had to make some hard choices to give us a manageable list to review at this stage, but we hope that the recommendations we have put forward today represent a common sense approach, and would help to ease the burdens of the more useful tax reliefs on those that use them.
“Since this review started I have been delighted by the interest and support for our task, and I would like to thank all those that contributed to the review along the way.”
The full report can be found at http://www.hm-treasury.gov.uk/ots_taxreliefsreview.htm