The Treasury plugs into digital world with tax system upgrade.
As part of the 2015 Budget, George Osborne revealed plans to abolish the current annual tax payment system. This is to be replaced with digital tax accounts for small businesses and individuals. The Treasury have deemed the present arrangements “complex, costly and time-consuming” with 1.8 million companies and 11 million individual taxpayers submitting annual tax returns and it considers that the digital upgrade will simplify things considerably.
Accessibility and accuracy seem to be the two biggest selling points of the digital switch. The new tax account will resemble an online bank account that you can access on any piece of technology – smartphone, tablet, computer – at any time of day or night.
Accuracy will be increased as businesses can stream their latest financial details to HMRC, which means they no longer base tax bills on old information. Your account will receive electronic notifications from HMRC regarding new information they gather from your employer, banks, pension providers and the Department for Work and Pensions. The combination of up-to-date financial details should see taxpayers receive extremely accurate tax calculations from HMRC.
Another intended bonus of a digitised tax system is that people do not have to ‘pay by a certain date’ but can pay their tax when it is most convenient to them. Taxpayers will have more control over their financial planning with options such as paying tax by direct debit, or in instalments, straight from your bank account.
A skeleton timetable for the roll out of these changes has been discussed. It is expected that the first 10 million individual taxpayers and 5 million small businesses will have functioning digital tax accounts by early 2016. By 2017 a first group of taxpayers with uncomplicated tax circumstances, an unspecified number, will not have to file an annual tax return. It is planned that a total switch over to digital will be up and running by 2020. This will see 55 million individual taxpayers with an online tax account. 5 million businesses will be able to connect their new tax account to their existing book-keeping data and enter relevant information when it is convenient.
If you don’t use the online system for filing your tax return now, the Treasury have provided assurance that you can still file a paper tax return if that is your preferred option. Better the devil you know?
