Why is tax in this country so needlessly complicated ffs

[ADEX2342]

Genuinely losing my mind trying to understand what I owe, what wrapper to use, what counts as taxable and what doesn't. It's not like I'm some city banker with offshore accounts. I'm a normal person trying to not get screwed by HMRC and it feels like you need an actual degree just to make basic financial decisions.
ISAs, LISAs, junior ISAs, capital gains allowances, dividend allowances, interest thresholds — all with different rules, different limits, different providers who may or may not actually offer what they claim to offer. And every time you think you've figured it out Rachel goes and changes something.
And the HMRC website. My god. Who wrote it. It sends you in circles and half the guidance contradicts itself depending on which page you land on.
Am I alone in thinking the whole system is designed to confuse people into either overpaying or unknowingly underpaying and then getting a nasty letter two years later? Because it really feels that way.
Rant over. Mostly.

[Tim Cognito]

The more complicated it is, the more loop holes there are.

Who does that benefit? Surely not those with money, power and influence?

[Skyedriver]

If you think it's complicated in the UK try Scotland's crazy add ons to the likes of PAYE and what used to be called Stamp Duty on property sales.
It's called STW.
Screw the worker.

[croyde]

Genuine question.

How are HMRC supposed to work out whether you made a profit, or not, with investments, funds, savings accounts etc

Considering some of my disasters during the Dot.com boom, I'm pretty sure that like most gamblers, I'm still in the negative.

Does one get a tax rebate if you fail miserably at investing

[55palfers]

.....and why can't you factor in inflation on shares you've held for a long time?

[alscar]

croyde said:

Genuine question.

How are HMRC supposed to work out whether you made a profit, or not, with investments, funds, savings accounts etc

Considering some of my disasters during the Dot.com boom, I'm pretty sure that like most gamblers, I'm still in the negative.

Does one get a tax rebate if you fail miserably at investing

No but you can carry forward any losses for CGT purposes to be offset against any future gains.

[alscar]

Wasn’t a previous strap line of HMRC’s marketing something like” tax doesn’t need to be taxing “?!
In reality I find handing 2 folders of papers to an accountant each year for our personal tax has long made things as easy as possible.
The cost has doubled this year but even so still vfm.

[PM3]

55palfers said:

.....and why can't you factor in inflation on shares you've held for a long time?

Then the b'stards would start talking about inflation adjustment for the tax you just paid ! It might potentially make worse which would really appeal to the misanthropes that operate hmrc

[LooneyTunes]

ADEX2342 said:

Am I alone in thinking the whole system is designed to confuse people into either overpaying or unknowingly underpaying and then getting a nasty letter two years later? Because it really feels that way.
Rant over. Mostly.

There is a very strong case for flat rate tax for everyone, with rebates to help those that need it.

Simpler (and cheaper to administrate), easier to comply with, less need for exploitation of loopholes.

But appears to leave the well off with more money, so politically unappealing. In spite of the fact that much of any "windfall" would be spent... further benefitting the econonomy.

[Eric Mc]

Simple answer - history.

We've had a proper national taxation system in the UK for almost 250 years - which is longer than most countries. Over this long period of time layer upon layer of complexity has been added until we got where we are today.

[simon_harris]

we should do away with TAX altogether and say if you want to spend more than 6 months of the year in the UK then you have to pay say £100k

from that point on you start applying rebates on a sliding scale depending on how much you earn, what sort of job you have (public sector, public benefit etc) status of health and so on until you get into negatives which would replace benefits.

there dead easy only took me a minute to come up with that, now why can't the government do better?

[JagYouAre]

alscar said:

croyde said:

Genuine question.

How are HMRC supposed to work out whether you made a profit, or not, with investments, funds, savings accounts etc

Considering some of my disasters during the Dot.com boom, I'm pretty sure that like most gamblers, I'm still in the negative.

Does one get a tax rebate if you fail miserably at investing

No but you can carry forward any losses for CGT purposes to be offset against any future gains.

As long as those losses were declared in the year they were taken or the subsequent 4 years. If not, they're gone.

[Mark V GTD]

My question has long been why is there no 30% tax band? Why does it jump from 20% to 40% at the £50k income level?

Edited by Mark V GTD on Wednesday 25th March 10:33

[The Ferret]

simon_harris said:

we should do away with TAX altogether and say if you want to spend more than 6 months of the year in the UK then you have to pay say £100k

from that point on you start applying rebates on a sliding scale depending on how much you earn, what sort of job you have (public sector, public benefit etc) status of health and so on until you get into negatives which would replace benefits.

there dead easy only took me a minute to come up with that, now why can't the government do better?

That doesn't sound like it would become complicated or abused at all

[Jawls]

Mark V GTD said:

My quartile has long been why is there no 30% tax band? Why does it jump from 20% to 40% at the £50k income level?

A 30% band would be pointless unless you also mucked around with NI.

As below 50k it’s 20% IT plus 8% NI so 28% all in.

If you had a 30% rate it’d be 38% after NI, so basically the same as 42% for those on north of 50k. So what’s the point?

Jeremy Hunt’s plan to eventually get rid of employee NI was a good one, but no doubt consigned to the dustbin now.

[alscar]

JagYouAre said:

As long as those losses were declared in the year they were taken or the subsequent 4 years. If not, they're gone.

Indeed , yes 4 years from when assets disposed of , good clarification thanks.

[Mark V GTD]

Jawls said:

If you had a 30% rate it d be 38% after NI, so basically the same as 42% for those on north of 50k. So whats the point?

So NI contributions are only 2% with the 40% tax bracket?

[The Leaper]

I do personal SA and have been doing so for maybe 30 years+. My income arises from State and personal pensions, dividend income from UK and overseas, NSI bonds, and a BIK regarding ex employer's private medical plan.

IMO, it is quite straightforward PROVIDED you have all relevant paperwork and records available AND kept up to date whenever anything changes. That's the key to simplicity. All I have to do is insert the totals into the relevant boxes in the SA forms. Takes maybe 30 minutes.

R.

[5pen]

It's complicated because successive governments can't help tinkering with it to fill their coffers and influence people to re-elect them, but I agree and I've been dealing with this frustration this week.

My tax affairs are about as simple as can be. I have an income from a pension and that's it (all investments are in an ISA and I make sure I don't break the threshold for interest on non-ISA savings).

HMRC have still collected almost double what I owe through PAYE due to incorrect coding. I informed them that the code was wrong twice, but the second error had been pointed out "too close to the year end" to be corrected. I asked them to refund the over-payment before the end of the tax year so that I may utilise my ISA allowance, but they claim "the system doesn't work like that" and I'll have to wait until they have performed their reconciliation, so I've missed out on the cash in the short-term and the opportunity to invest it tax-free forever (well, I haven't because I'll move some other stuff about, but that's not the point!)

As an aside, the system seemingly isn't set-up to make it easy to draw lump sums from a pension and tax them accordingly - they're just taxed like a monthly income.

[Sheepshanks]

Mark V GTD said:

Jawls said:

If you had a 30% rate it d be 38% after NI, so basically the same as 42% for those on north of 50k. So whats the point?

So NI contributions are only 2% with the 40% tax bracket?

Yes - NI UEL (Upper Earnings LImit) and the 40% tax threshold are aligned with each other.