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Changes to the Tax Return System explained

Currently, around 12 million people in the UK fill out self-assessment tax returns, and for most people it is a huge headache.

From 2016 that is set to change. That is the year the government is planning to begin rolling out its new digital tax accounts system. The plan is for everyone to be on the new system by the end of the current parliament.

Online digital accounts for everyone

Once the system is live, all 50 million UK taxpayers will be able to do their taxes online via digital accounts including sole traders and businesses that currently have to fill out tax returns.

That does not mean the end of tax returns however. Businesses and individuals will still have to tell the tax authorities about additional streams of income. It is just that they and their accountants will be able to notify the HMRC online and do so at any point in the year. This will dispense with the last minute rush to do it all at the end of the tax year.

Make it easy to check the information HMRC holds about your business

Each digital account will contain all of the information that HMRC holds about each business and individual. At any point in the year, a business, sole trader or individual will be able to access their digital account to check the accuracy of the information held by HMRC. They will also be able to see in advance how much tax they owe.

It will also make it possible for accountants, firms and individuals to change their tax codes online. Companies will also be able to give permission for partners and accountants to access their digital account.

Understand how your tax is calculated

The system will also make it easier for firms to understand how their taxes are calculated.

A pay as you go option

Part of the roll out of this new system will be the option for firms to pay their tax bill at points throughout the year, instead of all in one goes at the end of the tax year. The plan is for this to be voluntary, so firms who prefer to will still be able to pay their tax at the end of the tax year.

The new filing system will not be obligatory

Those firms and individuals that wish to will be able to continue to file their tax return at the end of the year. They will also be able to do this via the old paper system should they wish to.

Posted by Louise
July 25, 2015

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