Tax law rewrite project

The tax law rewrite project of HM Revenue and Customs is a major effort to re-write the entire tax legislation of the United Kingdom in a format which is both more consistent and more understandable. It aims to remove archaic language and impenetrable terminology from tax law and to replace it with modern language and terminology.

The project was initiated in 1997 and has so far produced four pieces of primary legislation and one piece of secondary legislation. A fifth bill is currently being drafted. The project was expected to focus purely on primary legislation but special dispensation was given to the re-writing of the regulations governing PAYE by the project.

The project began its work with the legislation covering capital allowances and the first legislation passed thanks to the project was the Capital Allowances Act 2001. The project then moved on to consider income tax. Three pieces of primary legislation—the Income Tax (Earnings and Pensions) Act 2003, the Income Tax (Trading and Other Income) Act 2005 and the Income Tax Act 2007—have been passed by Parliament. Their main change is to remove the concept of schedules from British income tax law. Previously income was assessed in one of six schedules (labelled from A through to F) depending on its source. The schedules have been replaced with everyday terminology. For example Schedule A income is now referred to as property income and Schedule E income is now referred to as employment income.

It was felt that in addition to the primary legislation necessary for the project that one piece of secondary legislation would need to be rewritten. The PAYE system is intimately linked with income tax in British law and consequently the legislation governing it was dealt with by the project. The result was the Income Tax (PAYE) Regulations 2003.

Following the passage of the Income Tax Act 2007 attention will be turned to corporation tax and it is estimated that two bills will be needed to cover the rewriting of corporation tax law.

External links

* [http://www.hmrc.gov.uk/rewrite/index.htm Tax rewrite project pages]