Budget 2015 - Abolishing the annual tax return

  • by Carole Jordan
  • 23 Mar, 2015
Messy desk whilst completing annual tax return
Watching the budget speech I was amused and delighted as George Osborne thumped the dispatch box and declared he had abolished the annual tax return! Of course, we all knew this was a slight overstatement, but the idea of replacing it with a digital account is a good one.

HMRC have most tax return information in hand:

  • Employment and pension income are captured by PAYE and so are on their systems already.
  • They receive an information feed from the banks and building societies showing interest paid.
  • No doubt something similar could be done for dividends paid on listed companies.

So, for taxpayers with just these types of income the job is nearly done.

This new system is suggested to be in place by 2020 and removing these taxpayers from the list of returns would be sensible.

As for the rest of us with income from business, dividends from unlisted companies, rental income and capital gains? One wonders how this could ever be achieved without some mind-reading from HMRC .

Online bookkeeping systems suggest themselves as a solution

But, how accurate are most business records? From experience, let me tell you, very few. I would fear for most businesses who chose to submit their own records direct to HMRC, let alone give them access to their bank accounts (which has been suggested!).

So, relax for the time being, more records are becoming digitalised and no doubt in due course there will be changes that could simplify the provision of information to HMRC. We shall have to be sure that returns are assessed accurately and HMRC are not well known for getting things right first time.

If we can avoid that dreadful rush in January then nobody would be more pleased than the accountants of this country. Meanwhile, we press on partly electronic and partly using ye olde paperwork.

As of this year, BusinessHeads will be offering a digital tax return solution to our clients

At the moment, we are trying to figure out how it works!

If you have concerns about preparing your tax return for 2014/15 do let us know immediately. The secret to stress free returns is to gather the information as it arrives and ensure it is all in one place before attempting to prepare your return.

Carole Jordan FCCA is the MD and founder of BusinessHeads providing accounts, tax and consultancy to small businesses in Brighton and London. Contact her on  01273 882200.

All details above were correct at the time of publishing - for more up to date information please get in touch .

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