Death of the tax return

Death of the tax returnIn the Budget last year, the government set out the vision for a transformed tax system that could mean the death of the tax return.

This was followed last December by the Making Tax Digital Roadmap, setting out the bold vision for how this would be achieved.

Making Tax Digital has the ambitious goal of making HM Revenue and Customs (HMRC) into one of the most digitally-advanced tax administrations in the world by 2020.

HMRC has now published six consultation documents, reflecting the scale of these proposed changes.

This formal consultation period will run until 7 November 2016 and invites everyone who is interested to share their views on the proposed reforms.

Details of the six consultations can be found at www.gov.uk/government/collections/making-tax-digital-consultations

Commenting on the consultations, Kate Smith, Head of Pensions at Aegon, said:

“The digital age has dramatically changed the way we manage our money, so it shouldn’t be a surprise that the HMRC is joining the revolution by introducing digital tax returns by 2020.

“A digital tax account allows people instant up-to-date access to their tax affairs, avoiding nasty shocks.

“Online access will allow everyone to instantly see what they owe or what the revenue owes them, allowing a more efficient management of their tax affairs.

“Digital tax returns will have the added benefit of getting the self-employed into the pension saving habit at the press of a button.

“Being able to see how much they need to pay in tax, makes it much easier to see what’s left over to pay into a pension.

“We hope it will encourage more people to claim back higher rate tax relief on their pension contributions.

“Only basic rate tax is added automatically to people’s pension savings, with any additional tax relief claimed back, currently via a self-assessment tax return at the end of the tax year”

What do you think about Making Tax Digital? Will digital tax returns encourage you to claim back the tax relief due on your pension contributions?

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