THE GOVERNMENT is expected to use the Budget to introduce online tax accounts for individuals and small businesses, signalling the end of the annual tax form.
The move will make life easier for the 11 million taxpayers and 1.8 million companies who currently fill in an annual tax form, the Treasury believes.
The move was initially raised in November 2011, when it was included in Modernising the administration of the personal tax system discussion document, and later in the May 2012 Personal Tax Transparency survey.
“I can see us moving in the direction of personal tax accounts so you’ve got much more information available for a personal taxpayer,” then-Exchequer secretary David Gauke told Accountancy Age in 2013. “It will be very secure, and like online bank accounts, they can see where they stand.”
When people log on to their account, they will be able to see how their tax is calculated. HM Revenue & Customs automatically updates it with information from employers, the Department for Work and Pensions, pension providers and banks. Taxpayers will be able to pay the taxes they owe as and when it suits them – for example, by direct debit.
The change will mean companies will not face a big end of financial year tax demand because HMRC has calculated their payments on the previous year’s information and they will able to pay in real-time.
The switch is scheduled to take place by 2020, with five million small businesses and the first ten million people using their own digital account from early 2016, according to the Treasury.
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Five million taxpayers are ow using digital personal tax accounts (PTA) as part of the making tax digital strategy, HMRC said