Written by: Keith Tully
Published: 20th March 2015
Chancellor George Osborne has promised to radically simplify the way in which taxes are collected from self-employed individuals and small businesses around the UK.
Osborne said during his recent Budget that all tax returns currently being filed with HM Revenues & Customs (HMRC) via self-assessment processes will instead be sent via a purpose-built digital system by 2020.
This “revolutionary simplification of tax collection” will see accounts being submitted digitally throughout the year via computers, tablet devices and smartphones rather than by post or online at a specific time of year.
The hope is that the digital system will make it much easier for self-employed individuals and small business bosses to make their tax payments in regular instalments.
“We believe people should be working for themselves, not working for the taxman,” said Osborne as he delivered his Budget speech to parliament.
“Tax really doesn’t have to be taxing, and this spells the death of the annual tax return,” he said.
Plans are in place to make it possible for individuals to link their accounting software and their bank accounts directly to their digital profiles on an HMRC platform. The benefits of which should be a simplified and streamlined process that makes life considerably easier for taxpayers and for HMRC itself.
Around five million small businesses and 10 million individuals are expected to have their details transferred to the new digital system in the early part of next year, with the plan being to see paper tax return filings phased out altogether by the end of the decade.
“One of the headline announcements [in the Budget] was the proclaimed abolition of the personal tax return but this evident good news hides the reality that taxpayers will still have to confirm their income online and add details of income that HMRC doesn’t know about, such as business or investment income,” commented Jim Meakin from the accounting firm Baker Tilly.
“This initiative should, in theory, help to make the new tax reporting system simpler, but we have some concerns given that HMRC doesn’t have an unblemished record when it comes to introducing new online services,” he said.