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ACCA Comments On UK Finance Bill, by Amanda Banks, Tax-News.com, London
Monday, March 31, 2008
The sheer volume and intricacies of the 2007/08 Finance Bill, published on Thursday by the UK Government, adds to tax complexity, according to the ACCA (the Association of Chartered Certified Accountants).
Chas Roy-Chowdhury, ACCA’s head of taxation, explained that:
“The Treasury’s explanatory notes for the Finance Bill alone run
into 1,148 pages but the actual Bill is 113 sections long and approximately
440 pages in total."
“Every year, the Bill becomes more complex and the volume of tax policy
increases. The devil is truly in the detail when it comes to trawling through
this Bill and the fundamental elements of a good tax system - fairness and clarity
- are often too hard to track down simply because of the Bill’s bulk.”
He went on to add that:
“Simplification is desperately needed; an independent Tax Policy Committee,
modelled on the Bank of England’s Monetary Policy Committee, would help
to remove complexity. Such a body would make for an efficient UK tax system
– one which is stable, certain, simple and fair.”
The Finance Bill brought into law a number of business and personal taxation issues
which were highlighted in the Budget on March 12th, detailed below with ACCA comment:
Capital Gains Tax: The withdrawal of indexation and taper relief for business,
making the potential tax on the disposal of a business costly - rising from
10% to 18%. ACCA believes that these new CGT tax rules will have an adverse
effect on economic activity because it will encourage short-termism.
Corporation Tax: The impact of Corporation Tax changes will be felt unfairly
by small business because the rate will rise for them – to 21%
in April 2008, then to 22% in 2009. The rate then decreases for big
business from 30% to 28%.
Non-doms: The Bill explains residency and domicile rules at Section 22.
While a GBP30,000 one-off charge on non-doms meets the needs of tax clarity,
it sends the wrong signal to international entrepreneurs who want to do business
in the UK. But ACCA is pleased that the Finance Bill confirms the Government’s
promise not to ask for more money from non-doms.
Individual Savings Accounts (ISAs): It is pleasing to see the cash ISA
limit increased from GBP3,000 to GBP3,600 from April 6th, 2008. This is a step
in the right direction; but the incentive to save it is not credible as the
overall ISA limit is raised by only GBP200.
Fuel duty deferred until October 2008: Postponing the 2p fuel tax to October
2008 was widely welcomed, but this is merely postponing the pain.
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