The number of questions on HMRC’s self-assessment forms has increased by 19% to 624 in 2024 from 531 in 2009, shows a study by Lubbock Fine, business advisors and chartered accountants. The increasing length of tax returns is a perfect example of red tape getting out of control in the UK tax system.
The growing complexity of tax returns has become a major concern for taxpayers, particularly self-employed people. Confusion around how to answer parts of the form may lead taxpayers to do so incorrectly – which can lead to a fine.
The whole process has become so daunting that some self-employed people with a low tax bill have given up filling in their tax returns, pushing them into the “informal economy.”
The main self-assessment form (the SA100), which is filled out by everyone submitting a self-assessment form, increased in length 17%, up now to 88 questions from 75 in 2009.
David Portman, Tax Partner at Lubbock Fine, says that the Government needs to take more seriously the need to streamline the tax system to prevent more people from making costly mistakes – or even falling into the informal economy.
Says David Portman: “The amount of work UK taxpayers are required to do to file their taxes has ballooned over the last fifteen years. To taxpayers many of these changes feel like box-filling for box-filling purposes.”
“It’s becoming increasingly easy to make mistakes on your tax returns – especially for those that don’t make enough money to justify employing an accountant.”
“If the government wants to get serious about cutting red tape, they must take a good look at reducing the length and complexity of these tax returns.”
High-income child benefit charge example of increasing complexity
An example of how the self-assessment forms is becoming more complex is the “high income child benefit charge”. The charge, which was introduced in 2013, hits parents earning over £50,000 with an additional tax on any child benefits they receive. The clawback increases gradually depending on the parents’ income, from 0% at £50,000 to 100% at £60,000. These thresholds have now increased with effect from 6 April 2024, having not previously increased from 2013, with the £50,000 floor increasing to £60,000 and the £60,000 ceiling moving to £80,000.
Says David Portman: “Because the high-income child benefit charge has an adjustable rate depending on the income of the parent, the value of the charge is a difficult for a layperson to calculate.” “The thresholds have finally increased after many years of not rising in line with inflation, but there is still a high effective tax rate for anyone with income between these levels which must dent productivity levels. These high effective tax rates and cliff edges need to be removed to reward workers.”
David Portman adds that the high number of supplementary tax return makes it even more complicated for self-employed people, as it’s sometimes unclear which forms they need to fill out.
The supplementary forms include:
- SA101 – additional information on certain income sources
- SA102 – employees or company directors
- SA103S or SA103F – self employment
- SA104S or SA104F – business partnerships
- SA105 – UK property income
- SA106 – foreign income or gains
- SA108 – capital gains
- SA109 – non-UK residents or dual residents
David Portman says: “There are just too many supplementary forms that taxpayers with a complex investment portfolio will need to fill in. Some of these forms contain very similar questions, making the process of filling them in laborious – and increase the risk of mistakes.”
