Cloud Accounting for Individuals

Making Tax Digital for Individuals

In March 2015 George Osbourne announced plans to revolutionise the tax system and bring about ‘the end of the Tax Return’ with the aim of making the tax system more efficient and easier for individuals who pay tax either pay through Self-Assessment or PAYE. Self-Assessment has been online for many years and has the ability for tax payers to access their own accounts and look at things such as their forthcoming tax payments or check if their tax return has been filed.

Personal Tax Account

The Personal Tax Account (PTA) is a gateway through which individuals can view the vast amount of information that HMRC holds, including past and present tax payments, National Insurance contributions and P60’s, pension forecasts, benefits the individual may receive such as Child Benefit or Tax Credits, tax code updates, and also track the progress of any forms that have been submitted to HMRC.

The benefits of this system are huge for the taxpayer. HMRC should now hold all personal tax information in one place that is easily accessible for the taxpayer to view. You are able to join the many other users who have already set up PTA’s now by following this link. Those long arduous calls on hold to HMRC for hours may also be a thing of the past as you’ll be able to communicate with tax officials via virtual assistants and web-chat functions. Time delays should be minimised as tax becomes real time, therefore removing the risk of missing deadlines and building up unnecessary penalties. This is the theory anyway!

Whilst the PTA is a positive step forward, HMRC will not be able to retrieve all of your data. Dividend income, for example, will still need to be notified to HMRC.

Upcoming changes

It is proposed that from 6 April 2024, self-employed businesses and landlords with annual turnover above £10,000 will be required to enrol in Making Tax Digital for Income Tax and submit quarterly reports of their income. Further information is expected to be issued before the new system goes live.  See our Cloud Accounting for Businesses page for more information.

Simple Assessment

Introduced in September 2017, HMRC’s “Simple Assessment” replaced the need to submit an annual Self-Assessment Tax Return for some taxpayers. Through a Simple Assessment, HMRC will use data it already holds to calculate what tax is due, instead of requesting vast amounts of information through a Self Assessment Tax Return.

HMRC have begun to issue either P800 forms (PAYE tax calculation) or Simple Assessment letters (PA302). A Simple Assessment will affect those taxpayers who either have a state pension in excess of the personal allowance or PAYE taxpayers who have underpaid tax and are unable to have this tax collected through their tax code.

If issued with a P800 or Simple Assessment letter taxpayers will have 60 days to notify HMRC of any queries before the return will become compulsory.

Any help from HMRC?

HMRC do have an app that is accessible with iOS and Android devices which you can use to track forms sent to HMRC, look at your digital tax account and access the tax calculator to find out what you can expect to take home per week/month/year through PAYE.

HMRC have run various webinars in order to show taxpayers how to set up their tax accounts and use basic functions of the system. You can watch these webinars here

How can we help?

These measures are likely to mean big changes to the way our clients interact with us and HMRC. Some clients will no longer have mandatory filing of Self-Assessment Tax Returns and the deadlines that come with Self-Assessment. Others will find that the new quarterly filing will be a considerable burden. However, we are able to assist in all compliance work including checking pre-populated data and advising on tax liabilities and possible tax relief claims, as well as navigating the quarterly reporting requirements and the software and systems needed. Further, by reviewing your current Tax position with you we are well placed to be able to advise on tax planning opportunities.