Budget 2015 Back Door Self Assessment

Budget 2015 Back Door Self Assessment.

In his budget speech, Chancellor George Osborne confirmed that self assessment tax returns are to end.  Full details on how this will be achieved will be published by the government by the end of 2015.

Currently, it is mainly higher rate taxpayers and those with other taxable income sources such as rental income from buy to let properties that complete tax returns.  In addition, one-off tax returns are done by some people for example when they have made capital gains that are taxable.

The government has suggested that it will simplify the tax system over the next parliament by introducing digital tax accounts.  This is supposed to remove the need for self assessment returns and annual returns for small businesses.

We believe this is yet another move by the government to indirectly require the whole population to submit tax information.

The only comparable we have for this is the RTI (real-time information) scheme that all employers must do on a monthly basis when they pay their employees.  When an employer runs its monthly payroll and RTI electronic submission is made to HMRC advising them of how many hours each employee has worked and how much they have paid in both income, tax and national insurance.

We suggest the proposed digital tax accounts system will mean that every person is registered for this including non-taxpayers, basic rate taxpayers and higher rate taxpayers.  We are then suggesting that for every bank account, investment, pension and other income producing item such as property, in addition to your employer completing RTI, the said bank will automatically supply HMRC with details of any interest paid to you that month.

Looking ahead, if this then moved to monthly submissions, in keeping with RTI, you could possibly be paying income tax, upfront, on a monthly basis for all income that you receive without any allowance for expenses or other offset and then be forced to claim any tax refund back.  Clearly, we have no detail as to how this will work but it can only be to automate all of our financial information directly into HMRC so that there is no place to hide for the' tax avoider' but the average man on the street will also be taxed instantaneously and hopefully, accurately, on all income.

Big brother is watching!

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