‘If I was Chancellor
of the Exchequer…’
‘If I was Chancellor
of the Exchequer…’
Put 100 CAs in one room and you can expect at least 100 different views on tax – some of them competing, some complementary, but all informed, insightful and, perhaps, provocative. We don’t have space for 100, but we start with these seven
For most accountants, April tends to mean one thing: the start of a new tax year. And this year it comes with a twist, as we finally see the introduction of Making Tax Digital (MTD) for Income Tax Self-Assessment.
It is a subject that cuts across society, one on which many people have – or will have, once they realise MTD applies to them too – an opinion. Just as many have their own views on taxation in general, whether that means introducing new taxes, scrapping old ones and raising or lowering others.
With the UK economy flatlining while the government grapples with ways to stimulate growth – and the impact of current events in the Middle East – the issue of who should pay, and how much, has seldom been more important.
So, we asked the experts what they think, putting one simple question to a group of CAs. “If you could change one thing about our current tax system what would it be?”
Some, as you can see, couldn’t confine themselves to just one, but each of our CAs has an insightful and challenging answer. All, we should be clear, are answering in a personal capacity, not as representatives of any particular company, firm or client. Read on to see what they have to say…
Dan Schofield-Jones CA,
Group Head of Tax & Treasury
I would abolish national insurance by raising income taxes – it is not right that earned income is taxed at a higher rate than unearned income, when we should be looking to promote productive labour. The current regime benefits those with existing assets and therefore entrenches inequality and is not in the spirit of taxation, where levies should be fair. For the same reason I would also align capital gains tax (CGT) and income tax rates.
I would work to remove cliff edges in the current income tax system, for example the reduction of child benefit above £60,000 and removal of the personal allowance/free childcare above £100,000. They benefit those with significant assets who can artificially reduce their pay to fall just below a threshold. If someone is unable to do this (maybe they have a mortgage or other outgoings) then they are not afforded the same advantage.
Perhaps controversially, I would also remove the CGT exemption on primary residences, with an offset on the tax charge arising on a sale against stamp duty paid. Unless you have invested in your property, why should you benefit from rising house prices which might mainly be due to, for example, government investment on improved transport in an area, when the cost of that investment has been borne by all?
Heather Abel CA,
Tax Director
If I could change one thing about our current tax system, it would be to simplify it and align it more closely with commercial accounts. Over time, layers of detailed rules and anti-avoidance provisions have added significant complexity and uncertainty, while often delivering limited additional benefit.
Moving towards a system with fewer bespoke adjustments, fewer cliff edges and more consistent treatment across regimes would improve certainty for taxpayers and reduce compliance burdens. It would allow HMRC and taxpayers to focus more of their effort on genuine areas of tax risk rather than navigating technical complexity. It may also attract increased foreign investment where there is more clarity of outcomes.
Alex Smith CA,
Finance Director
I think the best thing that HMRC could do would be to make the tax system:
• Fairer for all taxpayers, especially for those at the lower end of the earnings or income scale.
• Establish clearer rules to avoid ambiguity.
• Make it simpler to get right first time.
Andrew Holloway CA,
Tax Partner
HMRC’s venture capital schemes do so much good for high-risk, fast-growth companies seeking to raise finance in the UK. However, they can be incredibly complex to operate, at points unnecessarily so. Guardrails in the tax system are a good thing to prevent misuse, but complex rules which act as tripwires are not positive and curtail growth. If I could make one change, it would be to review and streamline these rules, making them easier to understand and operate for founders, funders and advisers.
Colin Park CA,
Tax Partner, Grant Thornton
A key reform I would propose concerns the presence of pronounced cliff edges at the £60,000 and £100,000 income thresholds – the points at which individuals begin to lose eligibility for child benefit and the personal allowance, respectively. These abrupt withdrawal mechanisms create disproportionately high effective marginal tax rates, particularly for single‑income households, and undermine the fairness and coherence of the UK tax system.
Moreover, such cliffs risk inducing economically distortive behaviours: individuals may reduce their working hours, decline promotions or avoid additional income altogether in order to remain below the thresholds, thereby weakening overall productivity incentives.
While the complete abolition of these withdrawal regimes would be costly in fiscal terms and likely politically challenging – given both the revenue they generate and the distributional narratives surrounding them – there are feasible alternatives that would mitigate their most harmful effects.
One such option would involve smoothing the withdrawal taper. For example, the personal allowance could be phased out at a more gradual rate above £100,000. This would preserve revenue while promoting a more rational, equitable and economically efficient tax structure, particularly in Scotland, where those earning more than £31,000 face higher rates of income tax than the rest of our UK counterparts.
Faye Macleod CA,
Principal, Campbell Stewart MacLennan & Co
As we enter a digital-first era and with increasing influence from AI, it’s critical that we consider the regulation of the cloud software industry.
The mandating of MTD means that client data is entirely in the hands of software companies. We must be assured the data itself is going to be adequately secured and accessible. Also, that neither our clients/taxpayers or accountants/agents are going to be continually subjected to significant hikes in software subscription costs, or changes to the product functionality for different software packages, giving us little choice but to accept or face the cost in time and disruption of changing software provider.
As CAs we have an obligation to ensure our clients’ data is protected and that they’re using the best products for them. But I don’t have confidence that the sales agents of cloud software companies will be motivated to sell the right products to prospective customers, who will include unrepresented taxpayers. There is a need to consider the level of control that mandating MTD gives to those companies.
The financial stability of the cloud software sector also requires consideration, and the consequences for clients and their data in the event of a software company disappearing.
Bryan Flint CA,
Director, Deloitte, and ICAS Tax Board member
UK tax legislation is famously long and complex. Partly, this is due to successive governments making changes. The tax system may not be perfect but incremental changes are the reason we have over 20,000 pages of statutes, secondary legislation and other materials (not including HMRC manuals and guidance). The sheer volume of rules can make it difficult and expensive for businesses and individuals to achieve compliance.
If changes are proposed, then, along with the government clearly setting out the objective of each one, there should be a more rigorous measurement of their effects. Undoing the impact of any change can be difficult, and itself introduces subsequent changes, further adding to the problem of volume and complexity. The threshold for making any change should be high.
Read ICAS’ tax policy positions and find more resources at the ICAS tax hub
Dan Schofield-Jones CA,
Group Head of Tax & Treasury
I would abolish national insurance by raising income taxes – it is not right that earned income is taxed at a higher rate than unearned income, when we should be looking to promote productive labour. The current regime benefits those with existing assets and therefore entrenches inequality and is not in the spirit of taxation, where levies should be fair. For the same reason I would also align capital gains tax (CGT) and income tax rates.
I would work to remove cliff edges in the current income tax system, for example the reduction of child benefit above £60,000 and removal of the personal allowance/free childcare above £100,000. They benefit those with significant assets who can artificially reduce their pay to fall just below a threshold. If someone is unable to do this (maybe they have a mortgage or other outgoings) then they are not afforded the same advantage.
Perhaps controversially, I would also remove the CGT exemption on primary residences, with an offset on the tax charge arising on a sale against stamp duty paid. Unless you have invested in your property, why should you benefit from rising house prices which might mainly be due to, for example, government investment on improved transport in an area, when the cost of that investment has been borne by all?
Heather Abel CA,
Tax Director
If I could change one thing about our current tax system, it would be to simplify it and align it more closely with commercial accounts. Over time, layers of detailed rules and anti-avoidance provisions have added significant complexity and uncertainty, while often delivering limited additional benefit.
Moving towards a system with fewer bespoke adjustments, fewer cliff edges and more consistent treatment across regimes would improve certainty for taxpayers and reduce compliance burdens. It would allow HMRC and taxpayers to focus more of their effort on genuine areas of tax risk rather than navigating technical complexity. It may also attract increased foreign investment where there is more clarity of outcomes.
Alex Smith CA,
Finance Director
I think the best thing that HMRC could do would be to make the tax system:
• Fairer for all taxpayers, especially for those at the lower end of the earnings or income scale.
• Establish clearer rules to avoid ambiguity.
• Make it simpler to get right first time.
Andrew Holloway CA,
Tax Partner
HMRC’s venture capital schemes do so much good for high-risk, fast-growth companies seeking to raise finance in the UK. However, they can be incredibly complex to operate, at points unnecessarily so. Guardrails in the tax system are a good thing to prevent misuse, but complex rules which act as tripwires are not positive and curtail growth. If I could make one change, it would be to review and streamline these rules, making them easier to understand and operate for founders, funders and advisers.
Colin Park CA,
Tax Partner, Grant Thornton
A key reform I would propose concerns the presence of pronounced cliff edges at the £60,000 and £100,000 income thresholds – the points at which individuals begin to lose eligibility for child benefit and the personal allowance, respectively. These abrupt withdrawal mechanisms create disproportionately high effective marginal tax rates, particularly for single‑income households, and undermine the fairness and coherence of the UK tax system.
Moreover, such cliffs risk inducing economically distortive behaviours: individuals may reduce their working hours, decline promotions or avoid additional income altogether in order to remain below the thresholds, thereby weakening overall productivity incentives.
While the complete abolition of these withdrawal regimes would be costly in fiscal terms and likely politically challenging – given both the revenue they generate and the distributional narratives surrounding them – there are feasible alternatives that would mitigate their most harmful effects.
One such option would involve smoothing the withdrawal taper. For example, the personal allowance could be phased out at a more gradual rate above £100,000. This would preserve revenue while promoting a more rational, equitable and economically efficient tax structure, particularly in Scotland, where those earning more than £31,000 face higher rates of income tax than the rest of our UK counterparts.
Faye Macleod CA,
Principal, Campbell Stewart MacLennan & Co
As we enter a digital-first era and with increasing influence from AI, it’s critical that we consider the regulation of the cloud software industry.
The mandating of MTD means that client data is entirely in the hands of software companies. We must be assured the data itself is going to be adequately secured and accessible. Also, that neither our clients/taxpayers or accountants/agents are going to be continually subjected to significant hikes in software subscription costs, or changes to the product functionality for different software packages, giving us little choice but to accept or face the cost in time and disruption of changing software provider.
As CAs we have an obligation to ensure our clients’ data is protected and that they’re using the best products for them. But I don’t have confidence that the sales agents of cloud software companies will be motivated to sell the right products to prospective customers, who will include unrepresented taxpayers. There is a need to consider the level of control that mandating MTD gives to those companies.
The financial stability of the cloud software sector also requires consideration, and the consequences for clients and their data in the event of a software company disappearing.
Bryan Flint CA,
Director, Deloitte, and ICAS Tax Board member
UK tax legislation is famously long and complex. Partly, this is due to successive governments making changes. The tax system may not be perfect but incremental changes are the reason we have over 20,000 pages of statutes, secondary legislation and other materials (not including HMRC manuals and guidance). The sheer volume of rules can make it difficult and expensive for businesses and individuals to achieve compliance.
If changes are proposed, then, along with the government clearly setting out the objective of each one, there should be a more rigorous measurement of their effects. Undoing the impact of any change can be difficult, and itself introduces subsequent changes, further adding to the problem of volume and complexity. The threshold for making any change should be high.
Read ICAS’ tax policy positions and find more resources at the ICAS tax hub
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