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Treasury aims to ‘transform’ the personal tax experience

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Personal online tax accounts and pre-filled tax returns could ‘transform’ people’s experience of the tax system and improve their understanding of what they pay, under proposals unveiled at a Downing Street press conference today.

A parallel consultation will explore options for integrating the operation of income tax and national insurance contributions, after a recent ‘call for evidence’ drew more than 70 responses that suggested a ‘clear appetite for reform’.

Personal tax transparency

The PAYE system ‘does not place much by way of demands of time on taxpayers, but it can also be remote and confusing’, David Gauke said in a foreword to the discussion paper Modernising the Administration of the Personal Tax System: Tax Transparency for Individuals, published by HMRC today. 

‘Public understanding of how much an individual pays in tax is lower than it might be,’ the Exchequer Secretary to the Treasury said. ‘We do not want to place greater demands on taxpayers’ time. But we do want to take steps to make the tax system easier to use and understand.’

HMRC is inviting comments by 24 February 2012 on ‘what taxpayers know about the tax they pay; what areas of the personal tax system create the most difficulty; how technology can help them better access and understand their tax position; and how HMRC can engage with individual taxpayers in hearing their views on how the tax system could be modernised’.

Gauke said: ‘I believe a modern tax system should embrace technological change to allow you to easily see how much tax you’ve paid, what your overall rate of tax is and how it has been calculated. It should also be easier for individuals to provide information to HMRC, check accuracy and keep personal information up to date.’

Income tax and NICs

The government will work with external stakeholders to identify ways to integrate the operation of income tax and NICs, and will report on progress at Budget 2012.

Responses to the recent call for evidence suggested a ‘clear appetite for reform’ short of a complete merger of tax and NICs, the government said in Integrating the operation of income tax and National Insurance contributions: Next steps.