Taxpayers could be in the dark over crucial changes to how their savings and dividends will be taxed because of HMRC’s failure to properly explain the moves, a group of peers has said.
In its Report on the Draft Finance Bill 2016, published today (4 March, 2016), the House of Lords Economic Affairs Report Committee expressed concern taxpayers are unaware of important changes coming into effect in a matter of weeks.
Most taxpayers will be caught out by provisions in the Bill that scrap the Tax Deduction Scheme for Interest, where banks deduct tax from most interest before it is paid, the Committee claimed.
Even those expecting the changes have been left unsure whether or not they need to file a tax return and pay tax to HMRC on future interest earnt, the Committee added.
Advisers have echoed the peers’ concerns.
Graeme McColgan, financial planner at London-based Million Plus Financial Planning, said: “It is very difficult for ordinary taxpayers to navigate the information on the HMRC website. Even with our experience we find it difficult and we know the website inside-out.
“It is incredibly difficult for HMRC to simplify a lot of the legislation they have to explain. I think that a lot more money needs to be spent on the website to ensure it is more publicly accessible.”
The committee also said that increased complexity of the tax system was placing burdens on the taxpayer, and called for a ‘new approach’ to tax policy that is carried out more consistently.
Craig Palfrey, managing director of Cardiff-based IFA Penguin Wealth, said: “The tax system is complicated and the government seem hell-bent on making it even more complicated especially given the changes referred to here and with the recent announcements over the residential nil rate band and the buy-to-let taxation hikes.
“Politicians appear to be doing a great job of keeping financial planners and accountants busy, unfortunately it is busy in the wrong areas and takes us away from the things we do best. It feels like we are continually having to be the bearers of bad news.”
