Budget2011: Online tax calculator is born

HMRC IS CONTINUING TO FOCUS on the internet with the introduction of an online tax calculator, but as this information is commercially available already, why bother?

The calculator is aimed at individuals to check they have paid the right amount of tax.

One explanation is that the taxman may want individuals to receive information from the horse’s mouth, said Patricia Mock, tax director at Deloitte.

“There is a lot of software out there that can do the calculations already. However, HMRC might want the information to come from them rather than from another source. ”

It is unclear why the taxman would introduce such a mechanism in the first place and invest the funds, she added.

According to an HMRC spokesman the government is introducing the calculator to support aims for greater tax transparency for individuals.

Personal tax complexity could also be a reason for an online tool, explains Colin Keane, senior director at Alvarez & Marsal Taxand.

The calculator will let individuals enter their pay, tax code and contributions, together with other details such as age and value of other non-cash benefits. It will then display the amount of tax and National Insurance paid and show the overall tax rate.

The calculator will also be available as a downloadable app for mobile devices.

The Government will also consult in the autumn to explore how the administration of the personal tax system can become more transparent for individual taxpayers.

The timescale for its introduction has confused advisers. they are perplexed as to why the tool will take a year to reach frutition, with similar products already available.

However, HMRC has said they need time to design and develop the calculators to by ready by April 2012.