Budget 2015: No more paper tax returns, but how will the new digital system work?

Billy Ehrenberg
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Finally: An end to paper tax receipts (Source: Getty)

Could the best thing from the 2015 Budget be the end of tax returns as we know them? In an announcement that had taxes as a central theme, George Osborne announced a new, digitised tax-returns system.

From early 2016, gone will be the days of wading through paper tax returns – instead HM Revenue and Customs (HMRC) will digitally combine tax data for millions of people on to one programme, which can be checked by users online at their leisure. Osborne will claim it will cut the time required from a tedious 40 mins to an efficient 10, a time saving of 75 per cent.

So how will it work?

The crux of the new plan is the option to link a tax account to an individual’s bank account, eliminating the need for end of year turmoil.

The service will work via a website, and can be accessed by mobile, tablet or desktop computer. What is more, people will be able to sort their affairs at any point during the year, avoiding the dreaded last-minute rush.

The programme will also aid transparency by breaking down how each user’s tax is calculated. The service will also update as the most recent information from pension data and employers is added to the system.

By the end of the next parliament in 2020, businesses should be able to link their accounts to the system directly, keeping information as up-to-date and relevant as possible.

Of course, some taxpayers may love the adrenaline boost of the old system; they will be able to continue sending paper returns.

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