and NIC CICUTTI
Kenneth Clarke's Budget speech lasted just over an hour: the Finance Bill, published yesterday contained nearly 200 clauses and weighed in at over 400 pages long, 60 pages longer than last year.
It came under immediate assault for its length and complexity - from politicians and accountants.
"The public and business will find it incredible that a government who are so long on rhetoric of lifting burdens and ending bureaucracy today fail to match their words with reality and instead deluge the public with such a huge volume of extra legislation, " said Andrew Smith, Shadow Chief Secretary to the Treasury.
The proposals on executive share options, and the costs and administrative burdens on businesses and the self-employed of the new self-assessment taxation regime, were two parts of the Bill which Labour intends to scrutinise closely.
The Opposition will also be pressing for further consultation on the taxation of gilts and bonds - which takes up almost 100 pages of the legislation - as well as pressing again for tax breaks for new capital investment and using capital gains tax to encourage longer-term investment.
Leading accountants also criticised the length and complexity of the Bill. "I was stunned at the fact that it was in two volumes this year," said David Oliver, a senior corporate tax partner at Coopers & Lybrand.
"The way in which it's been written is no different from in the past," said Ian Barlow, UK head of tax at KPMG. He added that the clauses written by private sector draftsmen, in a Treasury experiment, did not show any improvement on those drafted by the Parliamentary Counsel.
Accountants said that the Bill did not contain any unexpected additions as in the one last year. "There don't seem to be any nasty surprises as in the previous Bill," said Kevin Paterson, corporate tax partner at Ernst & Young. They also welcomed some measures in the Bill, notably turning a number of extra-statutory concessions into law and revisions to the new landfill tax.
However, Penny Hamilton, VAT partner at Coopers & -Lybrand, said that the scale of VAT anti-avoidance measures in the legislation was another indication of the enormity of the task confronting would-be tax simplifiers. "We're going to be in this cat and mouse game for some time to come," she said.
About 14 million savers and 26 million taxpayers will benefit from the measures in the Bill. Among those gaining are small savers who will no longer have to pay tax on savings, such as building society accounts, at the new rate of 24 per cent.
The Chancellor, Kenneth Clarke, intends to cut the tax to 20 per cent, adding pounds 4 to every pounds 100 of interest received already. However, retired people whose earnings are below the tax threshold or who are already in the 20 per cent tax bracket, will not benefit from the change. The personal allowance for people aged 65 to 74 is set to be pounds 4,910, up from pounds 4,630.
Other changes include a proposal not to tax compensation paid by insurance companies to those who were mis-sold personal pensions. In most cases, pension transfer victims would normally be reinstated into the scheme they had left or if that was not possible, their personal pension would be topped up. But in instances, such as when the account-holder has died, where compensation must be paid in cash directly to the estate, it will not be taxed.Reuse content