Budget 2015: annual tax returns scrapped

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The government is to scrap self-assessment tax returns in a move that will please millions of individuals and small businesses forced to comply with the "time-consuming" tax return system.

During his Budget speech, Chancellor George Osborne said: "12 million people and small businesses are forced to complete a self-assessment tax return every year. It is complex, costly and time-consuming.

"So, today I am announcing…we will abolish the annual tax return altogether. Millions of individuals will have the information the Revenue needs automatically uploaded into new digital tax accounts."

A "minority" with the most complex tax affairs will be able to manage their account online, he said, while small businesses will operate a single, digital tax account as a result.

"We believe people should be working for themselves, not working for the tax man," Osborne added. "Tax really doesn’t have to be taxing, and this spells the death of the annual tax return."

Further details on the scrapping of the annual return will be published later this year but HMRC has said individuals and small businesses "will be able to register, file, pay and update their information, at any time of the year, using the digital device of their choice".

It added that by the end of the next parliament the digital accounts will remove the need for annual tax returns.

John Allan, national chairman of the Federation of Small Businesses, said: "The idea for a single digital tax account is something we have long advocated - featuring prominently in our 2015 Business Manifesto.

"Implemented properly, this should reduce the time businesses take to complete their tax returns, and offers opportunities to deliver targeted support."

The government also said it would abolish Class 2 National Insurance contributions for the self-employed and extend superfast broadband connection vouchers for small businesses across more urban areas.

"Access to superfast services is a key requirement for small businesses," Allan added. "Delivery of this strategy will be critical to future-proofing the national economy."

The government said digital accounts will be in use by early 2016.

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A couple of years after retiring I received a polite note from HMRC stating that I no longer needed to fill in a tax return.
I did my sums and decided that they owed me money, and insisted on filling in a tax return. Each year since, after filling in a tax return, I have been repaid between £300 and £600(and my pensions are not very large!).
Be warned, do not trust HMRC to get their sums right!!   

I had a similar experience with HMRC.  
Despite completing a self assessment return, and paying the balance as requested, I subsequently received a notice of coding with the comment "You owe X amount of tax for previous years. You may remember we told you about this".
This has happened more than once now - worse than not getting the sums right, it just seems like they are trying it on!

It's a bold move and one that might not go down too well with some well established companies. Accountancy software in moving in a progressive direction with the likes of cloud based systems such as Xero. Theres a great article about it here - http://bit.ly/1bnPXyX But the trick is to get everyone onboard first.

you can opt out of this automatic coding on your return. It's done by HMRC as a courtesy to help you, so you don't have a bill in January. You just have to answer a question on the return to opt out..

HMRC can't possibly be getting their "sums wrong" for years when you don't do a return, as they have no data to base a decision. When you're told you don't need to do a return it simply means you won't be compelled to, and as long as you are a"tax return" customer, the PAYE system won't reconcile your account.
ALWAYS do a return or write to HMRC if you think you're due money.