Opinion  

OAPs need help with HMRC’s impenetrable forms

Tony Hazell

Tony Hazell

More than 10m people will be paying higher-rate tax within two decades the Office of Budget Responsibility has warned.

This led former Chancellor Lord Lamont of Lerwick to say the government should give priority to raising the top rate of tax in the next parliament.

An extra 1.4m have been dragged into paying higher-rate tax since 2010, as the higher-rate tax threshold has been lowered and frozen.

By the time of the general election next May, accountant Grant Thornton expects there will be 4.6m paying the 40 per cent tax rate.

This has great implications for tax planning and for those who already pay the tax rate or may do so in the future.

Pensioners in particular have much to be concerned about. HMRC does not have a great record at getting tax right when income comes from several sources.

And the great British public is simply not very good at filling in forms, no matter how simple those issuing may believe them to be.

I am currently helping a pensioner who in the space of a few months was sent a tax rebate, then an overdue tax demand and then asked to make a payment on account.

She is now owed several thousand pounds by HMRC, but the initial error stemmed from a mistake she made in filling in her tax return. This was compounded by another error when she did not understand how to account for tax HMRC was already collecting through her code.

The whole affair has caused her untold stress.

The difficulty is that as more people are forced to fill in self-assessment forms, there will inevitably be more mistakes. Yet HMRC is itself under financial strain and does not appear to have the resources to help those who need it.

Advice services are springing up everywhere for pensions and investments, but I see no sign of government-sponsored help for those struggling to understand their tax.

This lady was not a tax dodger, she was simply confused and could not afford to pay an accountant to sort out the form for her.

If this government and its successors plan to continue dragging ever more pensioners into self-assessment, then it must make sure HMRC has the resources and training to help those who struggle to understand its forms.

Get rid of unfair exit fees

RDR and the recent changes to Isas have highlighted the charges and inefficiencies of fund managers and platforms.

So how refreshing to hear that IFAs are ready to make a stand on exit fees.

These largely unjustifiable costs are being slapped on consumers with the clear intention of deterring them from moving. They are anti-competitive and something that the FCA should keep a close eye on.

Such fees were swept out of the cash Isa market years ago, and they have no place in the investment arena either.