Simpler Tax for Pensioners?

The Office of Tax Simplification (honestly, this IS a real department, it is not run by Sir Humphrey and today is not April Fool’s Day) has announced it will review the pensioner tax system as the Treasury attempts to simplify the pensions tax regime alongside the generally stated aim of the Government of simplifying tax as announced in the recent budget.


The OTS chairman Michael Jack has said: “For the estimated 5.6m people of pensionable age paying tax, this area is widely acknowledged as causing too many problems for a group, some of whom are the least able to cope with them.
The OTS will be looking for ways in which pensioners’ tax affairs can be dealt with in a much more straightforward way - especially for those with multiple sources of income.”

The OTS has now been ordered to carry out a review of pensioner taxation. But for now at least this will not include tax relief on pension contributions.

The Treasury exchequer secretary David Gauke commented: “I would like the OTS to carry out a review which identifies and examines which parts of the tax system cause the most complexity for pensioners, looks at how this varies across the pensioner population, and proposes ways to make their tax affairs simpler.
I look forward to an interim report on these issues ahead of the Budget 2012, and a final report with policy recommendations later in the year.”

So it seems the aim of the review will be to examine and identify which areas of the tax system cause the most complexity and uncertainty for pensioners, consider how these issues vary within the pensioner population and explore what changes could achieve simplification (There’s that word again!) and what the wider implications of these might be.

I’ve said it before and I’ll say it again. Simplification, Tax and Government are 3 words which just don’t seem to work for me in the same sentence. Call me a cynic, but there you are. That said, I’ll look forward to what comes of this and hope it achieves its aims. I just won’t be holding my breath while waiting...