![\"MTD\"](\"https:\/\/www.goodmanjones.com\/blog\/wp-content\/uploads\/2016\/09\/MTD.png\")
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HMRC want to make better use of Digital Tax Accounts to include information from third parties. This will result in outstanding tax being collected \u2018in-year\u2019.<\/p>\n
HMRC currently obtains third party information from banks, employers and government departments. However HMRC still ask customers to collate this information and report it on a Tax Return. This means that the customer will only find out about under\/over payments after the end of the tax year.<\/p>\n
HMRC believes that PAYE does not accurately reflect the current job market & lifestyle of customers. Often there are second jobs, casual work and fluctuating incomes. The aim therefore is to identify and collect more tax throughout the tax year.<\/p>\n
Oct 16 – Starting with customers whose interest is above the Personal Savings Allowance<\/a>, this will be included in PAYE codes based on an estimate from previous years (already used for higher\/additional rate).<\/p>\n Apr 17 \u2013 PAYE information will be used during the tax year to calculate whether the tax is correct and notify customers through their Digital Tax Account if not. Under\/over payments will then be collected throughout the year by HMRC automatically instructing employers\u2019 payrolls, in order to prevent these accruing at the year end. More admin burden will fall on employers\u2019 with the increase in P6 notices but HMRC hope that these will be automatically updated on payroll software. However employers\u2019 will also have to deal with more queries arising from employees about their tax calculations.<\/p>\n Apr 18 \u2013 Include common income types in the in-year calculation – starting with bank interest so that only a small number of customers will be affected first. The default position will be to collect any tax owed via PAYE \u2013 but customers can opt out and pay in one lump sum. State pensions could be next on the list to include in the in-year calculations.<\/p>\n If it is not possible to collect the tax owed via PAYE, customers will be advised of the projection of tax due for the year end through their account. In theory, this tax amount will be updated throughout the year based on real time updates of bank interest etc.. They can make payments through \u2018Pay As You Go\u2019 rather than one lump sum.<\/p>\n HMRC advise that they will only use information to calculate tax that they are confident is correct. Customers cannot change information such as the amount of bank interest on their digital tax account. They will need to contact the bank and get it resolved. This places the burden on the taxpayer. Whilst a query arises, they can tell HMRC this is happening and HMRC will not use this information to calculate any tax. If the query is not resolved at the year end, HMRC will use estimates to produce the tax assessment for what they believe is correct.<\/p>\n Jointly held assets will be assumed to be split equally unless HMRC are told otherwise. There is the scope to look at whether third parties should be telling HMRC in what proportions assets are held.<\/p>\n HMRC wants to reduce to a minimum the amount of information customers provide to them. The next steps could be dividends\/ share information and property information obtained directly from third parties.<\/p>\n HMRC want to increase the collection of third party information in order to reduce the admin burden for taxpayers. They believe that an up to date projection of tax to pay at the year end will help budgeting.<\/p>\n The consequences however will be:<\/p>\n We will be responding to HMRC\u2019s consultation<\/a> and making representations on our clients behalf\u00a0so please let us have your views by emailing MTD@goodmanjones.com<\/a>.<\/p>\n This is only one part of the consultation. <\/p>\n","protected":false},"excerpt":{"rendered":" Digital Tax Accounts HMRC want to make better use of Digital Tax Accounts to include information from third parties. This will result in outstanding tax being collected \u2018in-year\u2019. The current position HMRC currently obtains third party information from banks, employers and government departments. However HMRC still ask customers to collate this information and report it[…] <\/p>\nConcerns – quality of information<\/h2>\n
Future ambitions<\/h2>\n
Conclusion<\/h2>\n
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Summary of Consultation Questions<\/h2>\n
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What do you think?<\/h2>\n
Other areas covered by the consultation<\/h2>\n