The complexity of capital gains tax and income tax – discussion papers

Nov 18, 2019

The NI Tax Committee has published two more position papers, on the complexities of capital gains tax and income tax. Members are invited to send their observations and comments on these papers to Leontia Doran by close of business Friday 22nd November. 

Both papers have been prepared in advance of the joint workshop with the Office of Tax Simplification (“OTS”) discussing UK tax complexity which is being next week on Tuesday 26th November 2019. Read our paper published last week on Stamp Duty Land Tax complexity. 

Income tax has been chosen by the Committee as one of its two topics of the four topics for discussion at the workshop because not only has this legislation become increasingly complex over the last few years but its complexity and thus impact is widely felt across the UK by both tax professionals, and businesses and individuals. Capital gains tax (“CGT”) is one of the two chosen topics suggested by the OTS. Later this week a final position paper on administration of taxes will be published for comment.

In the income tax position paper, the Committee recommends that the UK Government tasks the OTS with carrying out a review of the complexities of UK income tax legislation. The UK Government should also task the OTS with carrying out a review of the UK CGT regime which should examine the following specific matters: - 

  • An evaluation of the CGT reliefs targeted at entrepreneurial behaviour with a specific focus on entrepreneurs’ relief;
  • A review of the rates and calculation of CGT to also consider the merits of returning to one single rate for all transactions; and
  • The OTS should be tasked with undertaking an annual review of tax reliefs in the UK; and
  • HMRC should launch a widespread education campaign in respect of both the non-residents CGT regimes and the 6 April 2020 changes for UK residents.

Any options or recommendations presented by the OTS should be seriously considered by the Government.