OpinionAug 6 2014

OAPs need help with HMRC’s impenetrable forms

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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.

The fees for probate valuations I referred to a couple of months ago are equally unjustifiable.

I’m sorry, but it just doesn’t wash for platforms to brag about their marvellous IT systems one minute, then complain about manual work involved in transfers the next.

A few years ago, the Office of Fair Trading stepped in to cap administration fees on credit cards, allowing firms to charge only the real cost of administering items such as duplicate statements. Similar constraints should be imposed in platform administrative fees.

The fund management industry in general has taken shedloads of money in fees from investors over the years

We are told the industry is working to automate these systems. But why the hell wasn’t this done years ago? It is not just the charges that should be under the spotlight. It is also the time taken to transfer.

This can take up to 32 days. In other words, the speed of moving funds has not improved in more than a generation.

The fund management industry has taken shedloads of money in fees from investors over the years, but seems more interested in spending it on fast cars and boats than state-of-the-art IT.

Degree in living the life of Riley

I see that St James’s Place is launching a master’s degree in wealth management with Loughborough University.

The degree will be exclusively available to the firm’s employees and partners, providing a level seven qualification. It is tempting to ask whose wealth they will be learning to manage: their own or their clients?

I am sure the syllabus will be full of useful topics like how to choose the best fine wine, picking your BMW and where to get a decent hand-made shirt.

Just joking, of course.

Tony Hazell writes for the Daily Mail’s Money Mail section