Tax & Accounting News

Series of tax consultations launched

12/08/2010

The government has issued nine consultation papers on various aspects of business and personal taxation as it looks to conduct a major overhaul of the system.

The papers ask for views on issues including reform of the PAYE system, tax relief on pensions and inheritance tax, in line with the government’s commitment to simplify tax in the UK.

On PAYE, the government is looking to remove the burden of administering the system from employers, by moving to a ‘real time’ system where tax and National Insurance contributions are automatically deducted from employees’ gross pay as it enters their bank accounts.

Pensions are likely to see a reduction in the overall amount people can invest tax-free each year, from the current figure of £255,000 per year to somewhere in the region of £30,000 to £45,000. This would replace the previous government’s plans to reduce pension tax relief for higher earners.

There will also be consultation on proposals to restrict the transfer of property into trusts which use anti-avoidance schemes as a means to avoid inheritance tax.