Tax Simplification ?

The intention of the government to end the annual tax return and abolish Class 2 National insurance were big headlines in the 2015 budget. But do we know how this is going to work in practice?

The answer is NO!

The intention is to replace annual tax returns with online digital tax accounts ( similar to the current government gateway system) where people can access, input and control their own taxation and other financial information.

These accounts are expected to be pre-populated with information such as interest and pension received as well as salary information which HMRC already receives via the new RTI payroll system. It will be down to each individual tax payer to review this information provided by other bodies to ensure it is accurate.

For those who have to produce business accounts it is expected that banking and accounting software will link with these tax accounts. Again this will rely on the taxpayers ability to produce accurate information and check the accuracy of information produced by other organisations.

The process of switching to these digital accounts is expected to commence in early 2016 and continue until 2020. More details will become clear as the process gets underway.