UK taxes in the dock

Nobody likes paying tax. But some taxes are more hated than others. We ask three AAT members to identify the UK taxes they dislike the most – and the reasons why

Jenni Frost MAAT: Inheritance tax

I think this is a very unfair tax, firstly because it affects the grieving family rather than the person who has died. Furthermore, the estate has already been taxed – assets are bought with post-tax income, but with inheritance tax you are made to effectively pay tax on the same things twice.

I also believe the annual limit for inheritance tax is far too low. Drawing the line at estates over the current limit of £325,000 catches some lower middle-income people, and I’m not convinced that was the original intention. With soaring house prices, this limit is not realistic; a reasonable size three or four-bedroom house in an affluent area can easily be worth over £500,000.

In order for inheritance tax to only affect the truly wealthy – although my first argument about fairness and double taxation would still apply – the annual limit needs to be increased to £1m.

Henry Cooper FMAAT: VAT

This is an unnecessarily complicated tax for something that could be solved in a much more efficient and straightforward way.

Certain things are zero-rated, such as baby food, water, books and magazines, and there is definitely some sense in keeping certain essentials VAT exempt. But the rules are just not clear enough. One of my clients owns a business for funeral vehicles. You have to pay VAT on some of them – such as the limousines – others, you don’t. This just makes it needlessly complicated.

Instead, we could have VAT on absolutely everything. Of course, it would not be at the present rate we have today because if the tax is on everything including, for example, houses we could afford to adjust it. This way you could even out discrepancies in society and get rid of other taxes, such as stamp duty. And save business owners the headache of trying to get VAT right.

Dawn Clarkson FMAAT: Heritage renovation taxes

On 1 October 2012 the UK government lifted the exemption on VAT to listed buildings and imposed VAT at 20% to all alterations and restorations. The move will cost owners of listed buildings thousands of pounds just to ensure their property does not fall into disrepair.

The lifting of the VAT exemption is likely to impact on the desirability of listed properties to property investors, leaving many languishing on the market. Listed buildings are some of our country’s greatest assets. The removal of the VAT exemption on alternations will mean potential investors and current owners simply unable to foot the bill for this extra expenditure.

Listed status means improvements and alterations have to use traditional methods and materials, which are already more expensive than those for non-listed property. The exemption gave some respite and, in some cases, meant the building had a future. The responsibilities of owning and looking after often fragile listed properties are demanding enough. This is a short-sighted decision by the government. Any disincentive will, in the long run, damage our nation’s heritage.

Ultimately, the government may well have to pay for those repairs anyway. Other proposed changes to VAT regulations – such as the ‘pasty’ tax – were revoked at the last minute. However, the government decided to go ahead with the lifting of exemption on VAT to listed buildings.

AAT Comment offers news and opinion on the world of business and finance from the Association of Accounting Technicians.