HM Revenue & Customs is launching a new simplified system for calculating tax bills, which will result in thousands of taxpayers being relieved of the chore of filling out tax returns.
Taxpayers affected by the change will receive letters saying that in future their tax assessments will be based on information already held by HMRC.
These letters will enclose details of State benefits, savings interest and employment benefits known to HMRC and the resulting tax calculations. Anyone wanting to query the figures must do so within 60 days. This compares with the current situation whereby taxpayers have up to nine months after the end of the tax year to assemble and check their own information and submit their return.
Some 400,000 people are expected to be included in the first phase of the roll-out of the new system, but ultimately 2 million out of the 11 million who complete returns will be included. First to be included will be people who are drawing State pension for the first time and some PAYE taxpayers with underpaid tax which could not be collected via their tax code. All existing taxpayers whose State pension exceeds their personal allowance will be included in the tax year 2018/19.
Although the new system is intended to help people, particularly the elderly, who have difficulty in competing tax returns, tax experts are warning that HMRC is estimated to make mistakes in one case out of ten, and that consequently it will be very important to double-check HMRC’s figures. The conclusion might be drawn that the main beneficiary of the system could be HMRC rather than the taxpayer.