OTS publish a review: Taxation and life events - simplifying tax for individuals

The Office of Tax Simplification (OTS) has published a report Taxation and life events - simplifying tax for individuals which examines a range of complexities that can affect people’s experience of engaging with the tax system at key points in their lives.

The report makes 15 recommendations on how complex tax issues relating to life events might be tackled.

The life events considered include:

  • having a child – and becoming entitled to child benefit
  • starting work – and becoming liable to pay income tax and national insurance contributions
  • starting to save for a pension
  • starting to draw a pension in retirement
  • when others need support and help, for example following bereavement

The recommendations cover areas such as:

  • The administrative arrangements for the operation of the high income child benefit charge including the potential for restoring lost National Insurance credits and a process for automatically issuing National Insurance numbers to the children of those who have not claimed child benefit.
  • Practical issues around the operation of the PAYE system including those arising in connection with starting work, changing jobs, taking on additional jobs, starting to receive state or other pensions and claiming expenses.
  • Pension relief and charges issues including the difference in outcomes for those who earn less than the personal allowance which can arise depending on whether their employer chooses a relief at source or net pay arrangement pension.
  • HMRC processes for dealing with survivors and personal representatives after death and how this could be done more rapidly and sensitively.
  • How HMRC could make it easier for suitable people (whether paid or unpaid) including agents and those with power of attorney to help others with their tax affairs.
  • How HMRC could extend the reach of its tax education programmes.

The recommendations all appear very sensible; some refer to a need for improved guidance but other improvements can only be achieved by fairly significant investment in HMRC’s processes and systems.