On 18th March, the Chancellor announced in his budget, that the current tax regime would be abolished in favour of an online tax account.
When will the tax return be abolished?
The tax return will continue into existence until 2020.
How will taxpayers report their income from 2010, if there are no tax returns?
By 2016, every taxpayer will be issued an online tax account.
This account will pull in information from other HMRC systems that 3rd parties use to file tax information on behalf of tax payers, such as payroll data.
Any other information (i.e. self-employed profits, business profits, income from dividends, etc) which HMRC do not possess – will still need to be reported by the taxpayer into the new system using their online account.
What advantages will this bring for the taxpayer?
Taxpayers will be able to see their tax affairs in real time, and then advise of amendments to ensure the right amount of tax is paid, on an ongoing basis.
It will also mean taxpayers can pay any tax due on additional source of income, on an on-going basis rather than waiting until they have submitted their tax returns.
The bad news!
Unfortunately this doesn’t mean the end of reporting of income for taxpayers to HMRC, and it doesn’t mean the end of paying tax!
Are these plans fixed?
It should also be noted that public consultation will soon commence on these proposals, which may impact the government’s plans.
