I am pleased that, at the recent Spending Review and Autumn Statement, the Government announced it will transform the tax system over this Parliament. This will be done by introducing simple, secure and personalised digital tax accounts, removing the need for annual tax returns.
The reforms contribute to a target to reduce the costs to businesses by £400 million by the end of 2019-20. By 2020, most businesses, self-employed people and landlords will be required to keep track of their tax affairs digitally and update HMRC at least quarterly via their digital tax account. Bureaucratic form-filling will be eradicated, and the information HMRC needs will be automatically uploaded to the digital accounts, bringing an end to the tax return.
Businesses will use software that updates their tax account as part of their ordinary day-to-day activity. Once the relevant data has been compiled, businesses or agents will upload it directly to HMRC via a computer or smartphone. This system will be secure and far less burdensome than the tax returns of today.
While businesses currently report information on returns and pay tax long after the end of the tax year, the new system will operate much more closely to 'real time'. Businesses will be able to see, through their digital accounts, an up to date view of their tax and a calculation of the amounts due. I hope that this will give my constituents more certainty over their tax position, and help them to budget accordingly. The Government will consult widely on the details of these measures in spring 2016.