Tax simplification must have a significant role in any proposed changes after the general election, according to Matthew Todd, associate director at RSM UK.
Todd warned that politicians should not get carried away with their messaging and instead should ensure simplification is the focus for any tax changes.
He said: “From a tax perspective, the main political parties may be accused of playing it safe in the run up to the election, as barely any genuine surprises were included in their manifestos. As a result, most of the excitement in the mainstream press has been around what is missing from manifestos.
“Following some media speculation, Keir Starmer was forced to confirm that the Labour party has no intention of assessing capital gains tax on the sale of individual’s main homes.
“Additionally, not so long after many taxpayers were hopeful that it would be abolished by the current government, it is interesting to note that inheritance tax does not feature in the Conservative party manifesto.
"It is also only mentioned once in the manifesto of the Labour party, which promises to close a perceived ‘loophole’ for non-UK domiciled individuals.”
Regardless of who wins the election, Todd believed significant tax changes should be expected in the near future, including reforms to non-dom tax status as well as changes to high-income child benefit charges.
He explained: “While there is a need for some complexity in our tax code, taxpayers with straightforward affairs deserve to have a simple and understandable tax system and any future tax changes need to be designed and implemented with this in mind.
“The Office of Tax Simplification was disbanded in 2023, following an announcement made by then chancellor, Kwasi Kwarteng, in his infamous ‘mini budget’ in September the previous year.
"At the time, Kwarteng said that instead of a single arms-length body which is separate from the Treasury and HMRC, we need to embed tax simplification into the heart of government.”
Todd argued a handful of tax simplifications such as increasing the high-income child benefit charge or taking the charge off the tax return all together, and instead only paying child benefit to those with income below the means-tested threshold could free up “significant” HMRC resources.
“This could allow HMRC to increase its overall tax yield through improved efficiency,” he added.
Any tax announcements could be “dressed up as a statement of intent” from a new government, according to Todd.
However he said: “It is in the best interests of both the taxpayer and HMRC to ensure that any future tax changes are implemented in such a way that it is clear to see that tax simplification is a key consideration.”
alina.khan@ft.com
