Monthly Archives: December 2012

Tax thresholds

ThresholdsWe like counting things in the Office of Tax Simplification. It’s a way of getting a handle on what a massive task tax simplification really is, and helps give us a better idea of where we should direct our efforts. In 2010, we counted up all the tax reliefs in the UK and ended up with a figure of 1,042. Earlier this year, we counted the total pages of tax legislation  17,795  and then counted how many were left when you took out repealed legislation, obsolete rules and duplications  6,102.

Now we have counted the number of monetary tax thresholds, ceilings and other figures in tax legislation – everything that is expressed in pounds or pence (or fractions of pence). We got the idea from our reliefs review, where we found some numbers that hadn’t been changed for many years, but others that were updated pretty regularly. We wanted to explore this further, and see if we could come up with any general themes or lessons for tax simplification.

The paper we are publishing today is the result of this work. It didn’t take long to put together – two or three weeks’ work at most, over the past 3 months. It was a relatively quick job to skim through the 17,795 pages of tax law to list the figures, but rather harder to trace each one back through successive Finance Acts to see when they first appeared and how often they changed since.  We haven’t asked HMRC to check the accuracy of the list, so it comes with a bit of a health warning and if you do find any mistakes, please do let us know.
We hope the article and spreadsheet will be of interest, and not just to tax nerds like me.
 

Tax thresholds paper

List of numerical thresholds in tax legislation

Jeremy Sherwood, OTS Secretariat

P.S. Our next big counting job is to list and analyse all tax definitions, and we are recruiting a postgraduate student to help us do this – see the OTS vacancies page.

http://www.hm-treasury.gov.uk/ots_vacancies.htm

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The OTS complexity index

Finance Act 2012Today the OTS publishes a proposed methodology for a tax complexity ‘index’. A paper setting out the methodology can be found below:

OTS Complexity index methodology paper

The aim of the index is:

  • To provide an indication of which areas of tax legislation are considered to be particularly complex compared to others;
  • To develop a tool that will help to prioritise the future work of the OTS; and
  • In the long term, possibly to provide tax policy makers with a methodology to help avoid unnecessary complexity in future and to help prioritise areas for future tax simplification.

To construct the index we have identified seven key criteria which influence the complexity of tax legislation. By scoring each of these criteria out of 5 and the weighting thee scores the methodology gives a complexity index score out of 10. This relative score can be used to rank all of the tax legislation by degree of complexity.

The seven criteria we have used are:

  • Legislative complexity;
  • HMRC guidance complexity;
  • Number of taxpayers impacted by the legislation;
  • Average ability of taxpayers involved in the area;
  • Avoidance risk;
  • Cost of compliance; and
  • HMRC operating costs.

The methodology is intended to spark a debate about what complexity is and how we measure it. We welcome comments and views on the index, especially whether we have included the right measures or if you feel there are others we could add.

The OTS blog

JW_OTS_bannerThe Office of Tax Simplification (OTS) has been in existence for over two years now and in that time, led by our Chairman Rt Hon Michael Jack and Tax Director John Whiting, we have had a real impact in simplifying the tax system for taxpayers and for HMRC. From small business tax reform to abolishing tax reliefs the OTS has advised the Chancellor on a wide variety of taxes. Our ongoing projects focus on pensioner taxation and employee share schemes; the final reports will be published in early 2013.

In conducting our reviews, the OTS seeks the views of taxpayers, businesses and advisers; as well as government departments such as HM Revenue & Customs, HM Treasury and the Department for Work and Pensions. This blog is a chance for the OTS to interact with all taxpayers on an ongoing basis. We will blog on our current projects, simplification in general and news coming out of the Office.

We hope you will take the time to read and comment on our blog and the work of the OTS.

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