Plans set out in the March 2015 Budget outlined abolishing the Tax Return and allowing online access to taxpayer's accounts. Starting this week HMRC officially launches the online Personal Tax Account, a service that has been in consultation and testing since early 2014.
The Personal Tax Account (PTA) provides taxpayers with a view of all taxes and benefits associated to them, allows updating of details online with immediate effect and gives a better means of communication with the Taxman with tools such as Chat and Virtual Help. More services are to be added to the PTA as it is in continuing development including Tax Credits, Tax Estimates, Online Payments and Pensions features.
Plans are ambitious and are aimed to be fully completed by 2020. The four cornerstones of HMRC's digital strategy include:
- Tax Simplified - HMRC will attempt to gather information from third-parties directly without requiring the taxpayer to provide it unnecessarily, thus cutting paperwork and time. This includes Banks, Employers, Governmental Departments etc. Online Accounts play a big part here and allow taxpayers to see the information held at anytime freely. We have previously discussed some of the issues with the collection of third-party data
- Making Tax Digital For Businesses - Real-time collection of accounting data will allow businesses to not have to wait until the year end to realise their tax position, thus preventing a build-up of money owed. It won't be until April 2018 but at least quarterly income updates will be taken.
- Tax in One Place - By combining all accounting data held, taxpayers with entitlements but also liabilities will be able to see a complete financial picture.
- Making Tax Digital For Individual Taxpayers - Starting this week and through to April 2016 all individuals and small businesses will gain access to their online Personal Tax Account.
The roadmap points to the end of the Tax Return and HMRC have provided two timeline charts showing how the digital strategy will unfold.
Reduction in the number of Self Assessment Tax Returns filed:
Timeline of updates to the Personal Tax Account service through the course of 2016:
Timeline of updates to the Personal Tax Account service through to 2020: