![\"Rachel](\"https:\/\/www.europesays.com\/britain\/wp-content\/uploads\/2026\/04\/reeves-spring-statement.jpeg\")
\t\tThe UK’s tax code is the longest in the world (Image: PA)\t<\/p>\n\t\t\tTuesday 14 April 2026 10:33 am\n\t\t\t<\/p>\n
\t\tThe UK’s tax code is the longest in the world (Image: PA)\t<\/p>\n
In its latest report, the OECD scolded the UK for its illogical and growth-impeding tax system. Ali Lyon speaks to five tax experts to work out how to fix it.<\/p>\n
Potato crisps and their corn chip cousins are \u2013 as indulgent savoury snacks go \u2013 undeniably similar. They taste alike and are a similar size. Neither is particularly healthy. And both are undoubtedly best enjoyed with hummus or a salsa dip.<\/p>\n
But for all their outward similarities, the two crunchy nibbles are worlds apart in the eyes of Britain\u2019s overzealous tax authority<\/a>. According to HM Revenue and Customs (HMRC) rules, the humble potato crisp counts as an item of confectionery, meaning any packet of Kettle or Walker\u2019s ready salted is \u2013 without fail \u2013 subject to a 20 per cent VAT charge. Its corn-flour cousin, on the other hand, is potato-less, and thus is free from consumption tax entirely. To pick Doritos over Hula Hoops in the supermarket, therefore, is to engage in an act of highly petty, totally legal tax avoidance.<\/p>\n This illogical quirk \u2013 and a swathe of other overly complex vagaries of the UK\u2019s tax system \u2013 was singled out in a recent report by the OECD<\/a>, titled Foundations for Growth and Competitiveness. In it, the economic body took aim at the countless examples of \u201cinefficient and regressive reliefs\u201d from VAT that the Exchequer permits at an ostensibly random level \u2013 like the difference between corn-based crisps and potato chips.<\/p>\n The two savoury snacks are not alone when it comes to irrational consumption tax rules. Rotisserie chickens (VAT) are taxed more than cold chicken (no VAT). Loo roll, a household essential, attracts the full 20 per cent levy, while \u2013 on account of it being a food \u2013 caviar does not. And then, of course, there is the age-old, increasingly tiresome debate over whether a Jaffa Cake is \u2013 as its name suggests \u2013 a cake (no VAT) or a biscuit (VAT).<\/p>\n The paper\u2019s<\/a> authors blasted the sheer number of these distortions, loopholes and exemptions in Britain\u2019s tax framework, which, they argued, \u201cdo not serve economic or social objectives\u201d. And they concluded by urging Rachel Reeves\u2019 Treasury to announce a full-scale review of the UK\u2019s current tax system.<\/p>\n The report will have been music to the ears of the British tax and audit experts who care about deeply the health of the UK economy, many of whom have long argued Britain\u2019s thorny tax system is ripe for root-and-branch reform.<\/p>\n The UK tax code \u2013 the definitive tome outlining out the phalanx of rules dictating when and on what a levy kicks in \u2013 is believed to be the longest of its kind in the world. The latest iteration of the vast tax opus tips the scales at some 21,000 pages long. In other words, if you were to print every page of the unwieldy document and lay them in a row, the paper trail would be a shade shorter than 15 Shard buildings stacked on top of one another. Or seven and a half Burj Khalifas.<\/p>\n The sheer number of rules \u2013 British wonks\u2019 argument goes \u2013 combined with the innumerable cliff edges and irrational thresholds, act as a leech on economic growth, disincentivise investment and work, and is a core reason behind why productivity in the UK has fallen since the pandemic.<\/p>\n \u201cThe OECD report has much to commend it,\u201d said Capital Economics\u2019 Ruth Gregory. Particularly encouraging, she added, was its suggestions to \u201cbroaden out the VAT base by phasing out exemptions\u201d, including one presumes, the aforementioned the crisp quirk.<\/p>\n Doing so, however, does risk causing \u201can initial boost to inflation\u201d to which lower-income households would be particularly vulnerable. But that could be mitigated by reducing the standard rate of VAT across the wider range of goods, and offering handouts for those on the lower rungs of the socio-economic ladder.<\/p>\n Equally promising, Gregory said, was the organisation\u2019s call for ministers to \u201cbroaden out kinks in the income tax schedule\u201d. The most famous of these is arguably the fabled, and much-feared, \u00a3100k tax trap; a bizarre quirk whereby a Brit earning six figures is taxed at an effective rate of over 60 per per cent on all income between \u00a3100,000 and \u00a3125,000. <\/p>\n A combination of the personal allowance reducing gradually once one\u2019s wage reaches six figures \u2013 and the loss of other taxpayer-funded support like discounted childcare \u2013 has given rise to a wave growth eroding behaviours. Some workers are contributing more to their pension to stay below the cliff edge. Others are postponing bonuses. And there even is a not insubstantial cohort who are working fewer hours \u2013 and turning down pay rises \u2013 just to stay below the \u00a3100,000 threshold. <\/p>\n \t\t\t\t\tRead more<\/p>\n \t\t\tTax instability drives ultra-wealthy to pack their bags<\/a><\/p>\n \tNICs and Income: Two taxes for the price of three<\/p>\n There are a host of other changes that experts believe should be made to the unwieldy code. Both James Quarmby, a founding partner in Stephenson Harwood\u2019s wealth practice, and RSM tax partner Chris Etherington, home in on the outdated National Insurance system, which, in Quarmby\u2019s eyes \u201cis a complex mess that no-one understands\u201d. <\/p>\n Not only does the levy come out of paychecks on top of income tax \u2013 serving an almost identical purpose \u2013 but it is headscratchingly complicated, with four classes each different based on whether you are an employer, employee, or self-employed.<\/p>\n To Quarmby, the solution lies in having one rate of national insurance for both employees and the self-employed, with an exemption for staff under 25 to encourage youth employment. Etherington, meanwhile is even more ambitious, calling for it to be merged entirely with the simpler income tax.<\/p>\n \u201cThere is now very little reason to have two separate taxes on income and it could encourage tinkering with the NIC rules, as they are less well understood,\u201d he told City AM. Merging the two could help keep things crystal clear for taxpayers so they have a better understanding of the impact tax has on their take-home pay.\u201d<\/p>\n For Tax Policy Associates\u2019s Dan Neidle, Treasury ministers should first tackle the all-too-complex and often senseless list of corporation taxes.<\/p>\n The current set-up for companies is full of \u201cinsane complexity\u201d, he argues, \u201cwhich makes the UK less competitive than Italy, Sweden, even Greece\u2026 all countries with higher rates of tax but saner systems.\u201d<\/p>\n One especially egregious culprit pertains to the way VAT is levied on small businesses. Unlike most taxes, which kick in at a threshold and only apply to the amount above it, once a small business generates more than \u00a390,000 a year, they are made to pay a VAT bill on all their liable earnings.<\/p>\n![\"Jaffa](\"https:\/\/www.europesays.com\/britain\/wp-content\/uploads\/2026\/04\/Jaffa-Cakes-1-2.jpg\")
The maker of Jaffa Cakes has long argued that its sponge-based snack should not be categorised as a biscuitFixing VAT and income tax perversities \u2018a commendable start\u2019<\/p>\n![\"Andy](\"https:\/\/www.europesays.com\/britain\/wp-content\/uploads\/2026\/03\/British-Chambers-of-Commerce-president-Andy-Haldane.jpg\")
British Chambers of Commerce president Andy Haldane called for a complete overhaul of the UK\u2019s property tax systemHow should we change property and corporate taxation?<\/p>\n