Three ways accelerated tax payments are likely to affect you
by Alexander Beard, on Mar 14, 2016 7:21:14 AM
George Osborne announced last year that the tax system as we currently know it will be phased out by 2020, after the Treasury described the system of tax returns as “complex, costly and time-consuming.” In its place, a new digital system will be rolled out by the government which purports to be easier to use and manage for both individuals and businesses. Whether or not that will be the case remains to be seen; what is undoubtedly true is that there will be some major changes in the way you calculate and pay tax every year. Read on to see what we reckon will be three of the biggest changes you’re likely to experience.
- Paperwork and forms will be replaced with online content and apps – the new system will sweep away the long-winded, repetitive and arguably antiquated method of filing your tax return with a contemporary approach, utilising the latest technology. HMRC’s website will be the hub for the new tax system, with individuals and businesses being able to use apps on smartphones and tablets. Whilst this marks a step into the 21st Century which many no doubt see as long overdue for a system which has remained grounded in old-fashioned methods for a long time, it’s inevitable that the government will have a task on their hands convincing some of the security and reliability of a completely digital system.
- Annual tax returns will become a thing of the past – with the digital tax system, an annual tax return will be phased out in favour of more regular returns on the money you’re earning. Predictions have varied from quarterly returns to monthly reporting or even “real-time” tax returns, but there’s no real way of know what the government will opt for until an announcement is made. The idea behind making more regular returns is that the system will become more accurate, saving the treasury time and money by becoming more efficient. The new system has also been presented as quicker and simpler for the taxpayer, although this again remains to be seen.
- You may see the changes sooner than you think – in its document Making tax easier: the end of the tax return published in March last year, HMRC stated that, “by early 2016 five million small businesses and ten million individuals will have access to their own digital tax account.” Whilst no follow-up to this figure has been published, what is true is that the amount of people accessing their tax details and completing their return online is rising year on year. Whilst the new system may not be completely rolled out until 2020, it’s very possible that you or your employer may start using the digital tax process much sooner than that.