Claims and elections
Executive summary
- AAT recommends that the OTS again consider a model that requires taxpayers to elect for one status or another (employed or self-employed). This is already the case in some other countries, notably Gibraltar and Germany.
- AAT again recommends that the Marriage Allowance is removed. AAT proposed this in 2018 and continues to believe that scrapping this relief would be in the best interests of the taxpayer and HMRC.
- The recurring issue with National Insurance Class 2 needs to be resolved urgently. The Self Assessment system enables taxpayers to pay Income Tax on their self-employed income but then sometimes advises that they do not need to pay class 2 National Insurance Contributions (NICs). Taxpayers need to pay the class 2 NICs in order to qualify for a full state pension.
- Gift Aid generally works well. However, improvements could be made both for individuals making donations and for charities seeking to maximise the donations they receive.
- The need to claim first time buyers tax relief on Stamp Duty could be removed by switching Stamp Duty liability from the buyer to the seller as AAT has recommended over the past three years. This would also save the taxpayer £675 million per annum and have a range of other benefits.
- AAT agrees that the Section 198 election process would benefit from reform. However, imposing a nominal or nil amount apportioned to fixtures as standard, as the OTS suggests, would likely solidify rather than solve the problem.
- AAT would like to see the government compel online marketplaces, such as Amazon and eBay, to collect and remit VAT. This would substantially reduce the administrative burden for small businesses who trade online; level the playing field for all small businesses, whether bricks or clicks; reduce VAT evasion; raise much needed revenue for the Exchequer and crucially help make the UK a more attractive place to do business.
Related consultation responses
Research and development (R&D) tax reliefs: consultation on a single scheme
We agree that a single scheme would be beneficial. However, it should not neglect the need to provide a targeted higher rate relief to small businesses.
Tax reliefs inquiry
We believe there's room to reform major relief expenditures. We also recommend halving the headline rate of Inheritance Tax and reforming pension tax relief.
Property income review: call for evidence
While we appreciate that a single tax regime for all types of lettings would be simpler, it seems reasonable that different tax regimes should apply to each.
Off-payroll working: calculation of PAYE liability in cases of non-compliance
Most AAT members consulted on these proposals welcomed them but differed in their views on the level of impact they would have.
