Inheritance Tax (IHT) on pensions is the most unpopular of the tax raising measures introduced by the Labour government during its first year, according to a survey.

The survey conducted by investment platform AJ Bell found that 44% of respondents were opposed to the pension IHT proposals while only 21% supported them.

Other measures were also strongly opposed, including the decision to raise employer National Insurance contributions (NICs), with 41% against the tax rise and just 24% in support. Raising rates of Capital Gains Tax (CGT) and restricting IHT relief available to farmers were also unpopular.

However, some tax raising policies attracted net support with 48% in favour of raising the rates of stamp duty on second homes.

Tom Selby, AJ Bell’s Director of Public Policy, said:

‘This data shows tax rises of every shade are divisive. While some tax increases attract a balance of support, they still divide the room.

‘Nothing that emerged from Rachel Reeves’ red box over the last year enjoys support from a majority of voters, illustrating that even less controversial tax changes are still politically fraught.

‘IHT is often described as the most hated tax and this data backs that up. Proposals to subject unused pensions funds to IHT on death are the most widely opposed of all the tax raising measures announced so far.

‘We’re urging the chancellor to instead consider alternative proposals which would be fairer and simpler, without undermining her plan to tax unused pensions on death.’

Internet link: AJ Bell

HMRC has issued a warning to be on high alert for scams linked to Winter Fuel Payments after receiving 15,100 reports of bogus activity in June.

Fraudsters have been targeting vulnerable individuals using SMS messages and phishing websites. During June, HMRC took action to remove 4,600 fake websites linked to Winter Fuel Payments.

HMRC is urging individuals to be alert to suspicious communications and to report any suspect phone calls, emails or texts via GOV.UK. HMRC will never contact people by text to claim Winter Fuel Payments or request personal information.

Anyone who is eligible for Winter Fuel Payments will receive the payments automatically without having to make a claim. Any recovery of the payment for pensioners whose total income is over £35,000 will be collected via Pay As You Earn (PAYE) or self assessment, dependent on how the individual pays tax on their income.

Kelly Paterson, HMRC’s Chief Security Officer, said:

‘Don’t be fooled by these attempts by scammers to take your money or access your personal information.

‘Never let yourself be rushed. If someone contacts you saying they’re HMRC, wanting you to urgently transfer money or give personal information, be on your guard. If a phone call, text or email is suspicious or unexpected, don’t give out private information or reply, and don’t download attachments or click on links.

‘I’m urging people to be alert to scams relating to Winter Fuel Payments and to report any suspicious texts, phone calls or emails to HMRC.’

Internet link: HMRC

HMRC plans to introduce a tax avoidance criminal offence risks overreach, the Chartered Institute of Taxation (CIOT) has warned.

HMRC plans to create a new strict liability criminal offence for failing to disclose notifiable arrangements under the Disclosure of Tax Avoidance Schemes (DOTAS) regime without a reasonable excuse.

The CIOT argues that DOTAS is much too wide in its current formulation to be suitable for a criminal offence. Applying the proposed offence to all the DOTAS hallmarks seems excessive, it adds.

This is especially true, since the proposal is intended to be a response to specific issues with disguised remuneration mass-marketed tax avoidance schemes, the CIOT warns.

John Barnett, CIOT’s Vice President, said:

‘The government is right to be taking a robust approach to those who continue to devise, promote or sell mass-marketed tax avoidance schemes. There should be no place for such people and their schemes in the tax services market.

‘However, every proposal to increase HMRC’s powers like this needs to be tested against a hypothetical test of what would happen if an HMRC officer decides to use or target the legislation inappropriately.

‘The present proposal places too high a level of reliance on HMRC’s unpublished (and as such, not transparent) internal governance process to provide appropriate, independent safeguards and work effectively, so that such an outcome could never happen in practice.

‘It is essential for building and maintaining trust in the tax system that the way HMRC use their powers and operate safeguards can be effectively monitored and subjected to appropriate oversight.’

Internet link: CIOT

Personal guarantees risk holding back the growth the economy needs, the Federation of Small Businesses (FSB) has warned.

Research by the FSB shows that 60% of limited company directors would borrow to grow their business – if they did not have to put hard-earned assets like savings or their houses on the line.

By contrast, only 13% would go ahead if a personal guarantee is required.

The FSB says the practice is now widespread, with 78% of directors who applied for finance being asked for a personal guarantee. Faced with this, a quarter decided not to take up finance at all.

The FSB is now calling on the government to close the Financial Conduct Authority (FCA) loophole that leaves these loans unregulated and unsupervised by banks.

It says that without action, would-be entrepreneurs could be deterred from starting up, with personal risk outweighing ambition and ideas left unrealised.

Tina McKenzie, Policy Chair of the FSB, said:

‘Personal guarantees should never be the default setting – they must be a last resort, used with care and absolutely necessary. If we are serious about building a climate where small firms can thrive and new ideas can take root, we need to rein in their overuse.

‘Otherwise, the speed of small business growth will slow to a snail’s pace at a time we need it the most, and we risk turning away a wealth of entrepreneurial talent.’

Internet link: FSB

The government should take a more strategic approach to tax policy, consulting earlier and giving greater thought to the design of the tax system, says Nichola Ross Martin, President of the Chartered Institute of Taxation (CIOT).

In her inaugural speech as CIOT President, Ross Martin said that making a success of MTD will need HMRC and tax professionals to continue to work closely together.

She also promised to continue to press for improvements to HMRC service levels over the year ahead.

The CIOT President also encouraged the government to consider introducing a statutory employment test

In addition, she urged Institute members and employers to feed into a review of the Chartered Tax Adviser (CTA) qualification.

Ms Ross Martin said:

‘While there is plenty of argument about rates and burdens in parliament, there is very little about reform and design.

‘Take employment taxes. The PAYE system is the government’s main breadwinner. Successive governments have tweaked the rates and thresholds for national insurance but paid rather less attention to the fundamental issues as to how tax policy might adapt to cope with the changing world of work.

To pose these questions is not to argue for an ‘everything everywhere all at once’ approach to tax. But it is to point out that there is more to tax policy than rates and thresholds. Strategy is crucial.’

Internet link: CIOT