Simplify ISA regime, extend apprenticeship levy and phase in Making Tax Digital – AAT’s three key asks for the Autumn Statement

Ahead of this year’s Autumn Statement tomorrow, Mark Farrar, Chief Executive of AAT has written to Chancellor Philip Hammond, recommending three changes to Government policy around skills, savings and Making Tax Digital (MTD).

These recommendations relate to the apprenticeship levy and apprenticeships in general, simplifying the current ISA savings regime and the MTD programme, which aims to ensure the UK has the most digitally advanced tax administration in the world by 2020.

Simplify savings

The current ISA regime requires urgent attention. There’s an ISA for almost every day of the week, offering unnecessary complexity, bureaucracy and confusion for consumers.

Even the Government website states “There are 3 types of ISA” referring to cash ISAs, stocks and shares ISAs and innovative finance ISAs, whilst saying nothing of Junior Individual Savings Accounts, Help to Buy ISAs or the new Lifetime ISA. The introduction of more and more ISAs is becoming increasingly confusing and should be stopped.

It would be far better to have one or two simple ISAs which merge the most important benefits and discard any unnecessary complexity. Standardisation would make both their availability and features more widely understood and ultimately more effective, whilst having the added advantage of being more easily and cheaply administered.

Promote skills

AAT welcomes the Government’s commitment to three million apprenticeship starts by 2020 but future skills needs will only be sustainably met with a greater emphasis on completion rates and on the overall quality of the apprenticeships being offered. The “Apprenticeship Levy” should be renamed the “Skills Levy”, and levy monies should be able to be spent on high quality traineeships and other forms of training that will benefit individuals, employers and the economy as a whole.

Increasing the flexibility of the levy would foster growth and deliver greater value for money.

Making Tax Digital

AAT wholeheartedly supports the ambition to make our tax system the most digitally advanced tax system in the world but we remain concerned about the timetable for implementation and about the costs MTD may place on both SMEs and taxpayers. In a recent survey, more than three quarters of AAT licenced accountants were concerned about software costs and time spent familiarising themselves with the new processes.

HMRC must delay implementation if significant technical difficulties arise, rather than proceeding regardless, which would risk substantially increased administration costs, reduced compliance by taxpayers, and reputational damage for HMRC.

AAT favours a phased implementation programme for MTD. The qualifying threshold should be set at £83,000 (the current VAT threshold) falling to £11,000 (the personal allowance) over a three year period. Adopting a phased implementation programme will assist SMEs whilst simultaneously helping HMRC achieve the best possible policy outcome.

Mark Farrar, Chief Executive, AAT concluded: “The recommendations we have made to the Chancellor will help boost productivity, encourage saving and save the taxpayer money.”

Jude Obi is AAT's Assistant Media Relations Manager.