New digital tax accounts – End of the tax return panic

The end of the hated annual tax return is being signalled by the Chancellor. George Osborne will use his last Budget before the General Election to unveil digital tax accounts for millions who currently have to complete self-assessment forms. They will work like online bank accounts and keep an up-to-the-minute record of all the tax someone owes or has paid.

How the Tax Return will work
New digital tax accounts are designed to end hassle for individuals but also boost business by significantly cutting down on red tape. Individuals and firms can already choose to fill in their annual tax return online, but this is simply the paper form on a website. Once a year, and a year behind, taxpayers have to send HMRC information it already holds on income – meaning many people end up with tax affairs that are out of date and incorrectly coded. They have only one opportunity a year to interact with tax officials to reconcile their account and notify them of any change of circumstances. The digital accounts will allow such updates at any time.

It will mean users can see all the taxes they need to pay without having to complete a tax return, and pay taxes they owe when it suits them – by linking to their bank account so they can pay in instalments or by direct debit, for instance. There will be particular advantages for businesses, which currently have to pay different taxes at different times, including VAT, corporation tax, income tax and National Insurance.

By early 2016, all five million small businesses and the first ten million individuals will have access to digital tax accounts. All businesses in the UK and 55million individuals will have one by the end of the next Parliament. Those who have difficulty gaining access to the internet will continue to be allowed to submit paper returns, or be offered support.

Source: http://www.dailymail.co.uk

 
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