Self-asessment tax returns to be scrapped

18th March 2015

The Chancellor has announced that the requirement for self-employed workers to file an annual self-assessment tax return will be scrapped.

In his Budget speech this afternoon, Chancellor George Osborne said that millions of people will be able to upload their tax information automatically into new “digital tax accounts”.

He said that businesses want their taxes to be low and simple to pay.

“To support five million people who are self-employed, and to make their tax affairs simpler, in the next Parliament we will abolish Class 2 National Insurance contributions for the self-employed entirely,” the Chancellor 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.

Osborne added: “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 on-line.”

Graeme Swan, EY managed services partner, said:  “Plans to scrap paper tax returns are a necessity and a reality in the digital world we now live in. The move to an online individual tax account will make it much easier and simpler for customers, more accurate and less time consuming to update information. It will also protect tax payers by improving compliance and reducing fraud.

“The decision to start with small businesses is also a logical one and will ensure these firms can spend more time growing their businesses, which is vital to the continued growth of the UK economy, rather than spending valuable time dealing with an overly complex UK tax system.

“To implement this ambitious plan in five years will require many parts of government to work together, as well as widespread industry engagement from banks and other third parties, to deliver on the promise of a truly joined up digital service meeting the needs of citizens.”

However, Jamie Morrison, private client partner at HW Fisher & Company, was more sceptical.

He said:”Few of Britain’s five million self-employed will mourn the passing of the annual tax return. The mad rush to dig out receipts in January is an annual torture for many.

“But the idea that the HMRC will simply automate everything is fanciful, and won’t help anyone other than those with the most straightforward tax affairs.

“And ditching the idea of self-assessment for state assessment of our tax liability has an Orwellian whiff to it.

“Rumours of the death of accountants are exaggerated too – the reality for most self-employed people is that they will continue to need expert help to get all the tax relief to which they’re entitled.

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