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Tax system reform

A digital tax system

The Government will invest £1.3bn to transform HMRC into ‘one of the most digitally advanced tax administrations in the world’. Most businesses, self-employed people and landlords will be required to keep track of their tax affairs digitally and update HMRC at least quarterly via their digital tax account. HMRC will ensure the availability of free apps and software that link securely to its systems and provide support to those who need help using digital technology. This will not apply to individuals in employment, or pensioners, unless they have secondary incomes of more than £10,000 per year. The Government will publish its plans to transform the tax system shortly and will consult on the details in 2016.

Simplifying self assessment

Draft legislation is to be published in Finance Bill 2016 that will enable a new, simpler process for paying tax. This will be used for taxpayers in self assessment who have simple tax affairs where HMRC already holds all the data it needs to calculate the tax liability, and where existing payment processes are not available. Taxpayers will be sent a calculation which will be a legally enforceable demand for payment, and taxpayers will be able to challenge and appeal these calculations. This process will come into effect in the 2016/17 tax year.