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HMRC’s digital initiative to modernize the tax system

Making Tax Easier (MTE) – HMRC’s digital initiative to modernize the tax system

HMRC plans to provide 5 million small businesses and 10 million individuals with this service by early 2016.

Eventually by 2020 more than 50 million businesses and individuals will have access to digital tax accounts eradicating the need to complete tax returns.

The intent is to simplify the tax system and will make it easier for taxpayers to understand their tax affairs and pay their taxes in time.

The UK tax system is getting a facelift to stay in sync with the advancing technology that offers digital solutions for almost everything. The government aims at modernizing the tax system by replacing the current tax accounts with digital ones. The proposed model will be similar to an online bank account where you can register your new services and update your information and understand what you have to pay without going through the process of completing a tax return.

HMRC will utilize the information it has to link it to the taxpayers’ accounts so that taxpayers do not have to provide information that is already available with the HMRC.

By early 2016 five million small businesses and ten million individuals will have access to their own digital tax account, and by the end of the next Parliament every individual and small business in the UK will have one. The digital accounts will be simple, secure, personalised to the taxpayer — and accessible through the digital device of their choice. As time goes on, they will offer more and more services.

This will be one of the biggest-ever changes to the way that people manage and pay their taxes. HMRC will make smarter use of the data it holds, linking it up in ways that weren’t previously possible, so that HMRC does more of the work that taxpayers currently have to do for themselves.

In future, people will only need check their tax information online to know how much they owe. Millions of people will no longer have to complete a tax return at all — while those with more complex tax affairs will be able to use their account to declare income and pay tax in year.

It will also be a major help for small businesses, which will be able to link their accounting software to their personalised tax account and have the option to pay as they go. This will give them more certainty about what they need to pay and when, so they can manage their cash flow better. They will also have access to a wider range of government support via a new Single Business Service.

Some of the anticipated benefits are:

  1. Simple, Clear and Personalized Support

Users will be able to get help and support that will be tailored according to their needs. HMRC intends to provide personalized information and guidance to the taxpayers making the entire concept more user-friendly.

  1. Access to Authorized Agents

Taxpayers can give access to their digital accounts to authorized agents. This way agents will be able to handle the tax accounts with efficiently with much less paperwork.

  1. Access to a wider range of Government Services

Digital accounts will eventually offer a range of other government services that will make it easy for taxpayers. Individuals will have access to their National Insurance contributions, and small businesses will also be able to find support in various ways to help their business grow.

  1. Integration with your accounting software

By 2020, businesses will have the ability to link their accounting software with their digital tax accounts. They will then be able to feed data directly into the digital accounts using their accounting software.

  1. View and Manage Information in One Place

Digital tax accounts will give the taxpayers the opportunity to view and manage their information in one place and see how their tax is calculated. They will be able to check their tax affairs and will also have the option to pay HMRC securely. Taxpayers will not have to provide information that HMRC already has which will save them time.

HMRC considers this to be the beginning and envisions a lot more for digital tax accounts to make taxation easy.

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