The Chancellor of the Exchequer should act now to update the current tax regime and use next week’s Budget announcement as an opportunity to make it fit for the modern economy, says ACCA (the Association of Chartered Certified Accountants) Ireland.

The global accountancy body has warned that a further rise in the personal tax allowance in the Budget won’t necessarily mean more available income for working families, as more people are being caught in the 40 per cent income tax bracket.

ACCA has urged the Chancellor of Exchequer to ensure that any rise in the personal allowance is not implemented in isolation and that the whole income tax regime is reviewed to ensure the allowance is not cancelled out by more people being caught by the 40 per cent tax bracket.

Chas Roy-Chowdhury, ACCA head of taxation, said: “Raising the personal tax allowance looks good on paper but many families across the UK won’t necessarily notice a difference in their take home. The higher tax rate is catching more and more people, which means they are paying more tax. HMRC figures show 7.7% of taxpayers in Northern Ireland pay the higher tax rate.* Any rise in the tax allowance should be matched by raising the threshold of the 40 per cent tax band, or freezing it at the very least.

ACCA has also called for a more current inheritance tax system and points out that IHT thresholds have been stagnant over the past number of years and should be increased significantly with property prices now picking up. Removing an individual’s home from IHT could be an alternative.

Chas Roy-Chowdhury concluded, “We recognise that this Chancellor is rightly treading a cautious path out of the recession. We aren’t out of the woods yet, and so tax giveaways might not be the smartest move. However, our tax system is looking outdated. Elements of the tax regime hark back to an era we have left behind a long time ago when only a small number of people earned enough to break into the 40 per cent income tax bracket. It’s surely time to bring our tax system into the 21st century.”

ENDS

For more information, please contact Shane Finnegan or Katrina Frazer at Aiken PR on 028 9066 3000 or email: firstname@aikenpr.com

Notes to Editors1. *HMRC Income Tax Liabilities Statistics 2011-2012 to 2013-142. ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management.3. There are over 20,000 members and students in Ireland.4. We support our 162,000 members and 428,000 students in 173 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. We work through a network of over 89 offices and centres and more than 8,500 Approved Employers worldwide, who provide high standards of employee learning and development. Through our public interest remit, we promote appropriate regulation of accounting and conduct relevant research to ensure accountancy continues to grow in reputation and influence.5. Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. We believe that accountants bring value to economies in all stages of development and seek to develop capacity in the profession and encourage the adoption of global standards. Our values are aligned to the needs of employers in all sectors and we ensure that through our qualifications, we prepare accountants for business. We seek to open up the profession to people of all backgrounds and remove artificial barriers, innovating our qualifications and delivery to meet the diverse needs of trainee professionals and their employers.