Tom Evennett, EY Head of Private Client, comments on the Chancellor’s measures to simplify the personal tax system:
“The Chancellor has taken steps over the last two days to drive forward the Government’s desire to simplify the personal tax system for individuals. This has included the removal of a new tax charge (the Health and Social Care Levy), the removal of an income tax bracket (the additional 45% tax rate) and the reversal of the 1.25% increase to dividend tax rates from April 2023.
“However, in his Statement today the Chancellor did not tackle a number of the quirks that remain in the income tax, and indeed tax credit, system. These include the removal of the personal allowance, which occurs once individual income exceeds £100,000 resulting in 60% effective marginal tax rates, nor the perceived unfairness of the removal of child benefit where one parent earns more than £50,000 (rather than considering this on household income basis).
“The abolition the Office of Tax Simplification is somewhat counterintuitive to the desire to simplify the income tax system, but people will be hoping that a future Budget later in the year or in the spring of 2023 will be another opportunity for the Chancellor, with the Treasury’s help, to go further with the simplification agenda.”