UK Tax System set for major shake up

Today HM Treasury published the first press release on the government’s views and plans for the UK Tax System.

David Gauke the Exchequer Secretary, stated  “At the moment, for a lot of people, the tax line on their pay slip is the only time they see just how much they’re paying in tax, but the Government doesn’t think that’s good enough.  We want to make tax more transparent and we want people to be more engaged with their own tax affairs.  “We plan to lift the lid on tax so that people understand how much they are paying, what their overall tax rate is, and what they should be paying, in the same way that the Government has lifted the lid on what they are paying for.

It is true that for many tax payers the UK tax system can seem confusing and it could be simplified but for me personally I am worried that all these radical changes could lead to countless errors. HMRC have tried to simplify the PAYE office by introducing new computer software and this has led to countless errors throughout the 2010 & 2011 years with them having to offer repayments and thousands being taxed incorrectly.

Furthermore the government are talking about merging National Insurance and Income Tax which to me is a very sensible idea but I just cannot see it happening for a very long time. Other ideas include supplying pre-filled tax returns to people in the self-assessment system using information from employers and banks.

HMRC have already formed partnerships with UK Banks so they can check people’s income when applying for a mortgage and this is where the future lies. The UK government want everything online so HMRC can access data more easily. Tax payers beware soon HMRC and the UK government will no more about you then you know about yourself.

Overall though there is no doubt the UK tax system is complicated but any changes should be made gradually making sure every change has been well thought out and implemented correctly.

 If you would like any help with your tax please do not hesitate to get in touch mitch@ljd.uk.com

Mitch the Tax Man