Charles MacKinnon, co-founder of Thurleigh Investment Managers
First I would change the income tax to a flat rate of 25% subject to a tax free allowance of £20,000. There would be no deductions, no allowances, no exemptions, no national insurance.
Second, I would change capital gains tax to a flat rate of 10%, subject to an allowance of £20,000 per annum.
Third, I would abolish all tax exemptions on all products: ISAs, SIPPs, VCT, EIS, insurance bonds, all would become completely tax transparent.
Fourth, I would remove the exemption from capital gains tax on houses, and I would also abolish inheritance tax.
With regard to investment products, I would institute a grading system for all “packaged” product such as Oeics, Sicavs, unit trusts and ETFs or investment trusts; every product that was available would have one of three grades:
- Very Risky: if you buy this you have no right of redress against anyone if you suffer a total loss of your capital;
- Risky: if you buy this you need to carefully consider the real possibility of significant loss of capital, and you should seek qualified advice before purchase;
- Regular: if you buy this you will be exposed to normal market risks of loss of capital and income.
With respect to providers of investment advice, I would propose that anyone who receives a fee for investment advice has to obtain a licence from the government, and this licence has to be displayed on their letter head, and this licence clearly states the level of insurance that the individual or firm has against errors or omissions, and the maximum amount that an individual could expect to receive in the event of the bankruptcy of the adviser or in the event of the receipt of bad advice.
These changes would enable individuals to arrange their affairs to reflect their needs, and not to be distorted to reflect tax rates.
This would have a huge benefit, as a tax return would be two lines; how much income and how much capital gain, and so vast numbers of tax collectors could be dispensed with, along with vast numbers of tax lawyers and accountants, a net benefit to society? People would buy a house they wanted to live in, and give it to their children if they wanted to, not when they thought they only had seven years to live.
They would buy investments knowing that if they went wrong, it was their fault not someone else’s.