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Press comment: OTS Life Events review challenges government to tackle tax cobwebs

10/10/2019

If you are covering the Office of Tax Simplification’s Life Events review: Simplifying tax for individuals report published today, please see the following comment from Quilter’s tax and financial planning expert, Rachael Griffin:

Rachael Griffin“The Office of Tax Simplification’s 15 recommendations to tackle the tax system are – in a nutshell – simple and straightforward. This is as it should be. The range of topics covered are hard to argue with. They focus on areas where the complexity is so immense that people are losing out through no fault of their own.  The report puts the onus on the government to tackle cobwebs that are lurking including child benefit and net pay. With an election seemingly around the corner the package of reforms provide strong recommendations for any incoming government to make lives easier for the public and earn the name of champion of simplification.”

Pension allowances

“The report highlights the impact of numerous pension allowances, such as the annual allowance, lifetime allowance and money purchase annual allowance. In particular they flag the MPAA, which is aimed at preventing over-55s from double dipping on pensions tax relief is not producing a “fair result”. A  systematic review of pension taxation would be highly welcome and a good chance to evaluate how all the allowances interact and impact how people are saving.”

Child benefit

“The counter-intuitive nature of claiming child benefit has been highly reported and it’s encouraging to see the OTS acknowledge this needs to be amended. Along with their recommendations they should allow parents to backdate NI credits for more than the current three month period.

“A sleep deprived overwhelmed new parent is presented with reams of new responsibility  and information. There will be numerous things on their mind, but what isn’t likely to be one of them is their state pension. In fact that’s unlikely to cross their mind until they come up for air, which could take months. And yet the government is claiming that three month leeway on appropriately filling out a child benefit form is enough. This limited timeframe is even more absurd when you consider that parents who are subject to the High income child benefit charge, and therefore don’t need to claim child benefit, still need to fill out the form so they can get NI credits.”

Net Pay

“Discrepancies around how pensions are treated when it comes to net pay schemes or relief at source is far more than a mere inconvenience. It’s a flaw that means nearly two million low earners are being deprived of free pension cash and this could account for nearly £8k in lifetime savings.”   

Financial Education

“Awareness and understanding of tax is limited in the UK and this creates vulnerability for the public and challenge for HMRC. So, as the OTS highlights, it’s in everyone’s interest to improve the public’s understanding. The best outlet for the upcoming generations is to implement financial education in primary schools. Research shows that 68% of primary school students who showed little capacity for delaying gratification initially, did so at the end of financial education classes.”

 

For more information contact

Kathleen Gallagher023 8072 629307990 004932kathleen.gallagher@quilter.com
Alex Berry023 8072 626007741 151931alex.berry@quilter.com

Notes to Editors:

About Quilter plc:

Quilter plc is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.

Quilter plc oversees £118.7 billion in investments (as at 30 September 2019).

It has an adviser and customer offering spanning: financial advice; investment platforms; multi-asset investment solutions; and discretionary fund management.

The business is comprised of two segments: Advice and Wealth Management and Wealth Platforms.

Advice and Wealth Management encompasses the financial advice business, Quilter Financial Planning; the discretionary fund management business, Quilter Cheviot; and Quilter Investors, the Multi-asset investment solutions business.

Wealth Platforms includes Old Mutual Wealth UK platform; Old Mutual International, including AAM Advisory in Singapore; and the Old Mutual Wealth Heritage life assurance business.

The Quilter plc businesses are being re-branded as follows: 

  • Quilter Financial Planning (previously Intrinsic)
  • Quilter Private Client Advisers (previously Old Mutual Wealth Private Client Advisers)
  • Charles Derby Group (becoming Quilter Financial Advisers)
  • Quilter Financial Adviser School
  • Quilter Cheviot
  • Quilter Investors
  • Old Mutual Wealth (becoming Quilter Wealth Solutions in 2020)
  • Old Mutual International (becoming Quilter International in 2020)

This press release is for journalists only and should not be relied upon by financial advisers or customers.

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This communication is issued by Quilter plc.  Registered office: Millennium Bridge House, 2 Lambeth Hill, London EC4V 4AJ, United Kingdom. Registered number: 6404270.  Registered in England.