As part of the government's vision to modernise our tax system, tax returns will be phased out in favour of a new digital tax account, changing the way millions of us handle our tax affairs. The idea over the next 5 years is to bring together each tax payers' details into one place; nice idea, Is it workable?

At this moment lots of different agencies hold information about us whether it be income, savings or benefits related, so it does make sense to pool all that detail into one designated place. However, part of the HMRC’s idea is to save money on administration costs by implementing such a system, and in doing so have cut many jobs already. It doesn’t make sense to implement such a big change to our tax system on a shoestring. If you have recently tried to contact HMRC via the telephone you will be aware of the long waiting times and this is entirely due to lack of people on the ground! In the long term though it will prove much more efficient and our tax affairs should be less time consuming.

What will be included? Many business owners and people who already have to complete tax returns have noticed changes logging into their online accounts, for example, Self-Assessment, VAT, PAYE, CIS accounts are already linked to their portals, but HMRC's plans go much further and will eventually require quarterly reporting, the need for up to date accounting will become much more important to businesses. With that in mind Dataday Services are already gearing up to help and support our existing customers and we will be very happy help new clients too! Please visit our services page for more information.

This is just the start of HMRC's ambitions, these accounts will not only be for those mentioned above, it is expected 30 million tax payers will also have their own accounts. Information will be gathered from various sources, obviously from employers and pension providers, but also tax credit and medical benefits information will be used to populate your account. You will be able to check your tax code, check how much tax you owe, track online forms you’ve submitted and claim allowances such as the marriage allowance.  However, there may be some implications, I have read that HMRC is looking to link our bank accounts to our personal accounts; so from the profits you might make on eBay to taxes on dividends and income from buy–to–let properties could soon be automatically supplied to the UK tax authority. For any comments or questions please pop on to our Facebook page and have your say!

 

Further reading on this visit: HMRC Digital Tax Accounts