Shrinking the tax gap

HM Revenue & Customs has admitted that as many as 3.5 million people should have been liable to pay just 10pc tax on their savings, during 2009/10 – rather than the 20pc tax that is automatically deducted. But a freedom of information request revealed that only 718,000 had applied to have this tax repaid.

Yes, we come to another conceptual problem with Ritchie\’s tax gap calculations. He doesn\’t take acount of those who overpay their tax.

And there are those who do.

4 thoughts on “Shrinking the tax gap”

  1. And right there is a perfect reason for you to organise your own tax affairs.

    Don’t let the taxman do it. You might pay too much.

    Funny, some think they are always right.

  2. In fairness it is the banks that are effectively deducting a withholding tax of 20% on accounts for which they do not have a mandate from the taxpayer countersigned by HMRC (or vice-versa) allowing them to be paid interest gross.

    Equally, if interest was paid gross by the banks without deduction then more taxpayers would be in receipt of untaxed, but taxable income than 3.5 million.

    Which crappy scenario do you prefer?

    The problem is that paid gross or paid net, there are losers.

    The problem is the complexity of having savings taxed at a different rate under specific circumstances.

    The problem is the complexity of the tax system.

  3. @John Galt
    NO, it is not the fault of the banks: they are required by law to deduct 20% unless they are given reason to do otherwise.
    Tim is talking about those for whom the tax rate on bank interest should be 10%. Your comment is totally irrelevant.

  4. but but but the Murph state would automatically deduct the “fair” amount of tax…

    No doubt he would disdain this as a small and insignificant ecxception to his GRAND DESIGN

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