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Monthly Archives: May 2014

One thing wrong with the tax system?

One thing most people would agree on is tax is complicated. The detail of tax is where people will disagree and politicians spend an awful lot of time debating, amending, rewriting and tinkering with tax laws.

An aspect or idiosyncrasy of the personal tax system is the oddity that exists on personal income between £100,000  and £121,000 where income between these bands is taxed at a marginal rate of 60%.

Obviously this is nonsense as everyone knows the top rate of personal tax is 45% which starts on income of over £150,000. But what happens when your income reaches £100,000 the Government starts to restrict your personal allowance which reduces down to zero when your income reaches £121,000.

How this situation ever came to exist is anyone guess, but to someone looking in, it would seem like it was an idea raised in a discussion focus group that went too far without somebody looking at how the numbers feed through, because its hard to believe anyone wanted the highest marginal rate of tax to be in a band between £100,000 and £121,000 as band rates are generally progressive in nature.

HMRC's plans to recover tax debts direct from taxpayers bank accounts

HMRC published a consultation document this week where it discussed proposals on how to recover tax debts directly from tax payers bank accounts without the need for a court order.

This would be used to target any taxpayer who owes over £1000 in taxes and would not require the taxpayers consent.

Like a lot of consultation documents, the important bit is if and when this comes into legislation, then the devil will be in the detail.

At the moment this consultation document is causing concern amongst some advisers and accountants on, amongst other things, the ability for HMRC to take money from joint accounts or the sale of stock and share ISA’S to cover tax debts, also what should be the level of savings to which HMRC can take up to, but not go beyond.

Whilst most people would not argue that people should pay the correct amount of tax, and people that do not pay should be held accountable for non payment. It is a step to far for some people that HMRC, who do not have a perfect record on getting things right, intend to act both as calculator of tax liability and collector/enforcer.