Taxpayers are not necessarily receiving clear communication on how their savings and dividends will be taxed because of HMRC’s failure to properly explain the moves, according to a group of peers.
The House of Lords Economic Affairs Report Committee expressed concern that taxpayers are unaware of important changes coming into effect in a matter of weeks. The Bill includes provisions that scrap the Tax Deduction Scheme for Interest, where banks deduct tax from most interest before it is paid. This will catch out most taxpayers, but according to the Committee, even those expecting the changes are left unsure whether or not they need to file a tax return and pay tax to HMRC on future interest earned.
Advisers have also voiced their concern, pointing out that ordinary taxpayers find it very difficult to navigate HMRC’s website – even for those who are very experienced.
In addition, the tax system is becoming increasingly complex, with the recent announcements over the buy-to-let taxation hikes for example, which is placing a burden on the taxpayer, and the committee has called for a “new approach” to tax policy that is carried out more consistently.
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