The end of the tax return

It was announced that by the end of the next Parliament, every individual and small business will be able to see and manage their tax affairs through a digital account, removing the need for annual tax returns.

Under the plans, by early 2016 all of the UK’s five million small businesses and the first ten million individuals will have access to their own digital tax account. It is intended to be simple, personalised and secure, offering an increasing range of integrated services. The accounts should bring together in one place all the information that taxpayers need to understand their tax position. They will be able to register, file, pay and update their information, at any time of the year, using the digital device of their choice.

Taxpayers will get a real-time view of their tax affairs and see how their tax is calculated. They will also be able to check how much tax they owe or need to be repaid and see their options for paying securely. Digital accounts aim to give small businesses greater certainty and control over their tax position. Those which pay more than one tax (such as corporation tax, VAT and PAYE) will be able to take a single view of their total liabilities across all taxes.

HMRC will automatically use the information it holds, along with new data from third parties, to populate the digital accounts. Those who pay their tax through PAYE will have their income tax, national insurance contributions (NICs) and pension position shown in their digital accounts, including any interest from banks and building societies. Taxpayers will then be able to log-in to check and confirm that their details are complete and correct.

By 2020, businesses will be able to manage their taxes together as part of their day-to-day running, rather than something to be done separately. Their accounting software will be able to feed data straight into their digital tax account, so that some businesses will simply log-in to check their details and not need to send an annual return.

The digital account will show PAYE taxpayers how much tax they will pay via their employer. Those with complex tax affairs will be able to tell HMRC about additional income online and have it reflected in their digital tax account. Individuals and small businesses will have the option to ‘pay as you go’. In addition, instead of making a number of payments across different taxes, they will be able to make just one. Taxpayers will be able to let agents manage their digital account on their behalf.

Over time, it is intended that the digital accounts will offer access to a range of other Government services. To begin with, individuals will be able to see how their NICs affect their state pension. Later in 2015, the Government will publish a road map and consult on how it will deliver the changes needed. Separate consultations will cover a new payment process to support digital accounts and reform of NICs for the self-employed.

Business rates review

As announced at Autumn Statement 2014, the Government will conduct a review of business rates to report by Budget 2016.

The Government will also consult on whether to introduce a business rates relief for local newspapers in England.

Broadband and mobile networks

The Government is investing up to £600m to improve mobile networks, and also announced ‘a new ambition that ultrafast broadband of at least 100 megabits per second should become available to nearly all UK premises’.

UK automatic exchange of information agreements

HM Treasury is introducing regulations creating due diligence and reporting obligations for UK financial institutions. This is designed to increase the deterrent effect for those who attempt to evade UK tax by holding financial assets outside the UK.

Gift Aid Small Donations Scheme

Measures will be introduced to increase the maximum annual donation amount which can be claimed through the scheme to £8,000, allowing charities and Community Amateur Sports Clubs to claim Gift Aid style top-up payments of up to £2,000 a year with effect from 6 April 2016.

Oil and gas

In an attempt to encourage further investment in the North Sea, the Government will introduce a new Investment Allowance and reduce the supplementary tax charge on oil and gas companies further, from 30% to 20%, to apply retrospectively from 1 January 2015.

The rate of Petroleum Revenue Tax paid on older oil and gas fields will also be reduced from 50% to 35%.

Bank levy

Legislation will be introduced in Finance Bill 2015 to increase the rate of the bank levy to 0.21% from 1 April 2015. A proportionate increase to 0.105% will be made to the half rate, also with effect from 1 April 2015.

Science and innovation

The Government will invest £40m to develop ‘Internet of Things’ technologies, with the funding focusing on healthcare, social care and smart cities.

There will also be a £100m investment into the Research and Development of Intelligent Mobility, including the development of driverless car technology.

Universal infant free school meals

The Government will provide £10m to support the provision of universal infant free school meals in small schools and a further £10m capital funding to help schools improve kitchen facilities.

Premium Bonds

The planned increase to the NS&I Premium Bond investment limit to £50,000 will take place on 1 June 2015.

Regional investment and devolution of powers

The Government will pilot schemes in Cambridgeshire and Peterborough, and, subject to formal approval of Greater Manchester Combined Authority, in Greater Manchester and East Cheshire from 1 April 2015 to retain 100% of any additional growth in business rates above expected forecasts.

A new ‘devolution deal’ has been agreed, giving the West Yorkshire Combined Authority more responsibility over skills, transport, employment, housing and business support.

Enterprise Zones will be expanded at Mersey Waters, MIRA, Humber, Manchester, Tees Valley (Prairie) and Oxford Science Vale, and the designation of two sites at Leeds Enterprise Zone will be changed to include Enhanced Capital Allowances. The Government will also extend the Enterprise Zone at Discovery Park and create new Enterprise Zones at Blackpool and Plymouth, subject to business cases.

Annual Tax on Enveloped Dwellings (ATED)

As announced at Autumn Statement 2014, the annual charges of the ATED will be increased by 50% above inflation for residential properties worth more than £2m for the chargeable period 1 April 2015 to 31 March 2016.

CGT: ATED

As announced at Budget 2014, the Government will extend the related CGT charge on disposals of properties liable to ATED with effect from 6 April 2015 to residential properties worth over £1m and up to £2m, and with effect from 6 April 2016 to residential properties worth over £500,000 and up to £1m.