Opinion Former Article

Sun setting on Self-Assessment Tax Returns

The CIOT has welcomed today’s announcement that Self-Assessment Tax Returns are to be replaced by digital tax accounts but cautions that tax may continue to be taxing for some.

Patrick Stevens, CIOT Tax Policy Director, commented:

“The sun may or may not be starting to shine on the UK economy but it is setting on the Self-Assessment Tax Return.

“This is good news for taxpayers provided that their data is secure and that paper tax returns remain an option for those people who prefer them. It is not clear by when HMRC will be in a position to bring in key information to populate those accounts. It may be that a digital tax account without this information will offer little over and above the current system. Employment income information should be readily available. Bank interest may take longer to make use of, and dividends of companies much longer still. Until this happens there will be little direct benefit for taxpayers.

“Also, it may not be the revolutionary simplification it is billed to be for all taxpayers. Those taxpayers with relatively simple tax affairs, for example employees and pensioners who pay their tax through PAYE, stand to gain most from this. But those with more challenging tax affairs, for example the self-employed and landlords, will still need to apply complex tax rules to calculate their income and will still then need to declare it to HMRC.

“Many taxpayers in this position will rely on their agents to manage their digital account on their behalf. We would caution against rolling out the new digital tax accounts to small businesses in particular until this facility is available and working satisfactorily.”


Notes for editors

1.       In today’s Budget, the Chancellor announced the death of the tax return, freeing 12 million people from what can be a ‘complex, costly and time-consuming’ process than often ends in a rush on 31 January.  Starting next year, tax returns will be replaced by personalised digital tax accounts which will be pre-populated with data HMRC already holds, including information about employment, pensions and savings. This will mean that in future many people will only need to check their tax information online.

2.       The Chartered Institute of Taxation (CIOT)

The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. Through our Low Incomes Tax Reform Group (LITRG), the CIOT has a particular focus on improving the tax system, including tax credits and benefits, for the unrepresented taxpayer.

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