Regulation  

Budget ExpertTaxation: Rajiv Vadgama, tax director, Baker Tilly Tax & Accounting

Budget ExpertTaxation: Rajiv Vadgama, tax director, Baker Tilly Tax & Accounting

As expected, in his Budget the chancellor announced the government’s intention that by early 2016 the first 10m taxpayers will get a real-time view of their tax affairs, tax calculation and tax due or repayable.

Taxpayers will be able to check if entries are correct or not. Even taxpayers with complex tax affairs can tell HMRC about additional income online and have it reflected in their digital tax accounts.

Small businesses will also get greater certainty and control, especially where they pay more than one type of tax. Individuals and small businesses can ‘pay as you go’, or pay so many months down the line. Instead of making several payments across different taxes, they can make just one.

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If they wish, taxpayers can let agents manage their digital accounts on their behalf. This is partly the reason all government websites have started to migrate to gov.uk URLs.

Of course, taxpayers will still be responsible for ensuring their tax bills are correct, and for giving HMRC information that is not reported by other means. But digital tax accounts will make this quicker and simpler. The government will publish a roadmap, and consult on how it will deliver the changes later this year.

Also announced was the introduction of an allowance from 6 April 2016 to remove tax on up to £1,000 of savings income for basic rate taxpayers, and up to £500 for higher rate taxpayers. Additional rate taxpayers will not receive an allowance.

This introduction of tax-free saving limits for basic rate and higher-rate taxpayers is linked to the above removal of the existing tax return system, and will simplify reporting of bank interest for a large number of taxpayers.