New online tax accounts launched

By mid-December more than a million taxpayers completing their self-assessment will have been directed to their online personal tax account, HMRC said as it set out details of its “transformative” plans to use technology to cut costs and improve customer service.

The personal tax accounts, which will work in a similar way to online banking, promise to give people a “clear and joined-up view” of the tax they pay and allow them to update their tax details, removing the need to resubmit information.

The launch of personal tax accounts is part of a drive towards a fully digital tax service.

Around two million businesses are already using their digital accounts.

By April 2016 all of the UK’s five million small businesses will have access to their own digital account.

Individual taxpayers will have access to their own accounts by April 2016.

HMRC said that eventually, by 2020, businesses and individual taxpayers would be able to register, file, pay and update their information.

HMRC said every individual and small business would have access to their own secure digital tax account next year.

The move to digital accounts will pave the way for the automatic uploading of the information needed by HMRC — leading to what it described as “the end of the tax return for millions of taxpayers”.

During 2016, information on bank and building society interest will start to be included in tax codes, removing the need for many taxpayers to report this income separately in a tax return, it said.

The new personal tax accounts are aimed at providing a joined-up view of individuals’ tax and benefits, allowing them to update their tax details as needed and making it easier to contact HMRC officials through services like web chat.

David Gauke, financial secretary to the Treasury, said the new accounts were part of a digital transformation aimed at making the tax system more effective, more efficient and easier for taxpayers.

He said: “Giving customers the ability to manage their tax affairs online is our latest step towards a fully digital tax system. This government is determined to revolutionise how we deliver public services and the tax system is no exception.”

Two million businesses are already using digital accounts and every business will have access to one by April next year, HMRC said.

By 2020, most businesses, self-employed people and landlords will be required to keep track of their tax affairs digitally and update HMRC at least quarterly via their digital tax account. The move, announced in the Autumn Statement earlier this month, provoked concern from tax advisers which said some taxpayers would struggle to cope.

Businesses will be required to use some sort of software to keep records of their income and expenditure. Once the software has compiled the relevant data, businesses or their agents will feed it directly into HMRC systems via their computers or smartphones.

HMRC said that updating it directly in this way “will be secure, light-touch and far less burdensome than the tax returns of today”.

HMRC said its vision was about “much more than simply adding digital tools to the current system: it is about transforming the UK tax system into something that feels completely different”. The changes would allow it to collect and process information affecting tax in a way that stopped tax due or repayments owed from building up. In addition, taxpayers would be presented with a complete financial picture of their tax affairs.

HMRC said that, by next May, it would have added new services to the personal tax account including improvements to the service providing tax estimates a year in the future, a new online payment and repayment service, the integration of the tax credits online service and the introduction of a new service for national insurance and the state pension.