We were talking about financial back up plans for last week's Finance Fridays. This week we are looking at the plans HM Revenue and Customs (HMRC) have for changing the way people handle their tax affairs.
If you currently need to complete a self-assessment form and you haven't submitted your return for 2015-16 yet then you will now have to submit it online. The deadline for paper copies was 31st October 2016. In many ways this is a good thing as the paper form has many sections you don't need to complete. By doing it online these sections are automatically excluded as you start to fill in your details. You will also get a notification from HMRC once it has been submitted so you definitely know they have received it. This is the start of the way HMRC are wanting to change the tax system.
The aim is to have to all in place by April 2020. Since April this year every individual and small business has had access to a digital tax account. Through this account you are able to view a personalised tax account along with advice, support and secure messaging for any queries.
For many the annual tax return is something of a burden. Collating a whole year's information in one go can be quite stressful especially when you are unsure about the exact amount of tax you owe. From April 2018 businesses, self-employed people and those who let property out will update HMRC at least quarterly where it is their main source of income. They will also need to do it if it is a secondary source of income above £10,000 and their main income is from employment or a pension.
The overall idea is to have a business' or individual's whole tax liability across all the different taxes in one place to view and manage. This means that income tax, VAT and National Insurance can be be listed in once place rather than having to contact different departments. It is also planned to collate tax information from banks and building societies and apply the information to individual accounts. It should be a great help for individuals who have income from more than one source as they will be able to clearly see how their tax coding and allowance is spread across their payments.
Have you looked at your personal digital tax account? Do you think it is a good to collate tax information digitally?
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