Digital Tax Accounts – Timing is everything
15th April 2016
The Government has announced that as part of its vision to modernise the tax system, tax returns will be replaced by digital tax accounts for individuals and businesses.
The digital accounts aim to bring together each taxpayer’s details in one place, just like an online bank account, so they can register for new services, update their information, and understand quickly and easily what they need to pay — without ever having to complete a tax return again.
The Government believe it will be a help for small businesses, linking their accounting software to their personalised tax account and having the option to pay as they go. This will give small businesses more certainty about what they need to pay and when, allowing them to manage their cash flow better.
The following sets out the Governments proposed timeline for the introduction of the digital tax accounts.
January – June 2016:
- Initial consultation on options to simplify the payment of taxes
- Taxpayers can see how their National Insurance contributions affect their State Pension through their digital account
- All of the UK’s 5 million small businesses and every individual taxpayer will have access to their own digital tax account, seeing information HMRC holds about them
- Webchat introduced to support PAYE taxpayers in their digital tax account
- Public consultation on the scope and operation of more frequent reporting of information by businesses to HMRC using digital tools
- Public consultation on third party information
- Testing starts for secure messaging between taxpayers and HMRC in their digital tax account
- Public consultation on simplifying HMRC’s tax administration
July – December 2016:
- Testing starts for digital reporting of accounts by small businesses
- Bank and building society interest above the personal savings allowance included in tax codes for employees and pensioners
- Authorised agents able to manage their clients’ digital tax accounts
- Testing starts on using real-time information to show taxpayers how their personal allowances are shared between jobs and pension
January – June 2017:
- Testing starts for digital reporting of income from letting property
- New online billing system begins
- Taxpayers able to report additional sources of income through their digital tax account
July – December 2017:
- Digital tax accounts show taxpayers an overview of their tax liabilities in one place
- Automatic tax code adjustments prevent PAYE under and overpayments
January – June 2018:
- Interest paid by banks and building societies starts to be shown in digital tax accounts
July – December 2018:
- Most businesses, self-employed and landlords start updating HMRC quarterly for income tax and National Insurance obligations through their accounting software
- Taxpayers who currently report their Child Benefit to HMRC no longer need to do so
- Most businesses, self-employed and landlords start updating HMRC quarterly for VAT obligations through their accounting software
- Capital Gains Tax on the disposal of residential properties needs to be paid within 30 days
- Most businesses, self-employed and landlords start updating HMRC quarterly for Corporation Tax obligations through their accounting software
- The full range of HMRC services are available through digital tax accounts
If you have any questions concerning digital tax accounts, please contact us on 01273 701200 or by email at firstname.lastname@example.org
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