Capital Gains Tax (CGT), Inheritance Tax (IHT) and entrepreneurs relief could be reformed as a part of a project by the Office of Tax Simplification (OTS).
The OTS was launched last year by the new coalition government and provides the government with independent advice on simplifying the tax system in the UK.
Giving evidence to the House of Commons Treasury Committee, John Whiting (right), tax director of the OTS, said that IHT, CGT and stamp duty could be part of a review in 2012. Whiting said that the review could follow the suggestions of the Mirrless Review, carried out by the Institute for Fiscal Studies, which suggested that IHT should be replaced by a tax on beneficiaries, abolishing stamp duty and reducing the CGT relief given on riskier investments.
In his evidence Whiting also said: “There’s definitely an argument for a radical approach”
He continued: “One of the things we started was the PAYE/NI integration exercise, and that started with radical thinking.”
“We engaged with the IFS around small businesses and there are things we have done in turn. In terms of what we will come up with next year, that has been informed by Mirrlees and if we looked at capital taxes we would have regard to the thoughts of the Mirrlees review.”
Experts welcomed the news that some of these complex tax arrangements may be reviewed and simplified but warned that people should not expect to see lower taxes at a time when the government needs to raise as much revenue as possible to help reduce the budget deficit.