The Death of the Tax Return
'Tax Returns will become a thing of the past' said David Gauke, the Financial Secretary to the treasury, a couple of months ago. Seeing as he easily held his Herefordshire seat in the recent general election, it seems that he will be in a good position to ensure that this particular promise becomes a reality.
Today, more than 85 per cent of Self Assessment tax returns are done online. It is expected that by early 2016, the first ten million individuals will have access to their own digital tax account. HMRC hope that over time, these will fundamentally transform the way in which taxpayers interact with the tax system.
The accounts will bring together in one place all the information that taxpayers need to understand their tax position — just like an online bank account. They will be able to register, file, pay and update their information, at any time of the year, using the digital device of their choice. By the end of the next Parliament, it is hoped that every individual will be able to see and manage their tax affairs through their digital tax account, removing the need for annual tax returns.
HMRC will automatically use the information it holds, along with new data from third parties, to populate the digital accounts. Those who pay their tax through PAYE will have their income tax, National Insurance contributions and pension position shown in their digital tax accounts, including any interest from banks and building societies. Taxpayers will then simply be able to log-in to check and confirm that their details are complete and correct.
Of course, taxpayers will still be responsible for ensuring their tax bills are right and telling HMRC about information that is not reported by other means. WSM expects to continue adding value to it's many private clients in this area and HMRC have confirmed that taxpayers will be able to let agents manage their digital account on their behalf if they wish.
Later this year, the government will publish a roadmap and consult on how it will deliver the changes needed, some of which will require changes to legislation and investment in new systems. The private client team at WSM will keep you up to date with progress and will be here to support all our clients through what the Revenue describe as bold vision for a new, modern tax system.