Review of Taxation of Pensioners
This is often seen as overly complex, with many pensioners subject to PAYE before retirement but self-assessment afterwards when they may have several small sources of income that may or may not need tax deducted. A perennial problem indeed! It is not the amount of income that makes somebody’s tax affairs complex – rather it is the number of different sources.
The Office of Tax Simplification (OTS) is to conduct a review of the system of pensioner taxation and make recommendations on how to simplify the tax system and ease tax administration.
The OTS will provide an initial report by Budget 2012 that:
• Examines evidence and identifies the areas of the tax system that cause the most complexity and uncertainty for pensioners.
• Identifies how these issues vary within the pensioner population.
• Explores what changes could achieve simplification and what the wider implications of these might be.