Economic Affairs Committee
The Draft Finance Bill 2016

2nd Report of Session 2015-16 - published 4 March 2016 - HL Paper 108

Contents

Summary

Chapter 1: Introduction

Chapter 2: The Taxation of Savings Income

Position prior to 2014/15

Taxation of savings income

Tax collection

Changes announced in March 2014 Budget

Changes announced in March 2015 Budget

Consultation on options for non-TDSI Savings Income

The draft legislation

Guarded welcome for proposed changes

Simpler for most taxpayers

But more complex for many

Lack of consultation

Implementation issues

IT issues

Data matching

Communicating with savers

Conclusions

Recommendations

Chapter 3: Reforming Dividend Taxation

Taxation of dividends

The current position

The history of grossing up and the dividend tax credit

Taxpayer behaviour in the current system

Minimising tax and National Insurance Contributions liabilities

Countering taxpayer behaviour

The draft legislation

Effect of the reforms

Other objectives of the dividend tax reform

Simplification

Compliance burdens

Individual investors

Director/shareholders of small companies

Interactions

Personal financial decisions

Multiple objectives

Lack of consultation

HMRC’s communication strategy should be reconsidered

Clarity on corporate obligations

Conclusions

Recommendations

Chapter 4: Simple Assessment and Making Tax Digital

Current income tax collection arrangements

Pay As You Earn

Self Assessment

Moving to ‘digital tax accounts’

Background

Simple Assessments

The Government’s vision for 2020

The draft legislation

Simple Assessments and their implementation

Taxpayer awareness

Checking Simple Assessments

Who will get a Simple Assessment?

Conclusions on Simple Assessment

Recommendations on Simple Assessments

The transition to digital tax accounts

Support for the proposals

Concerns and areas for further consultation

Implementation issues

Taxpayer support

Digital record keeping and quarterly reporting

Conclusions on digital accounts

Recommendations on digital accounts

Chapter 5: The Role of the Office of Tax Simplification

Current role and functions of the OTS

The draft legislation

OTS activities and achievements

Resources

The role and remit of the OTS

Consultation and scrutiny of legislation

Development of policy

Reporting on progress in simplifying the tax system

More complexity is being added

Conclusions

Recommendations

Chapter 6: Simplification and Taxpayer Compliance Burdens

Complexity of the tax system

Differing forms of ‘complexity’

Complexity and the savings and dividends proposals

Box 1: Cliff Edges

Reduction of complexity and compliance burdens: areas for action

Appropriate consultation

Effective communication

Assessing Digital Readiness

Certainty, stability and strategy outlines

Independent scrutiny of HMRC implementation

Summary of Conclusions and Recommendations

Appendix 1: List of Members and Declarations of Interest

Appendix 2: List of Witnesses

Appendix 3: Call for Evidence

Evidence is published online at http://www.parliament.uk/business/committees/committees-a-z/lords-select/economic-affairs-finance-bill-sub-committee/ and available for inspection at the Parliamentary Archives (020 7129 3074).

Q in footnotes refers to a question in oral evidence.





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