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Government launches vision for simpler personal taxes

News Release issued by the COI News Distribution Service on 14 November 2011

Exchequer Secretary, David Gauke has today set out the Government’s vision for a more transparent, open, and easier to understand personal tax system.

For many taxpayers, the tax system can feel remote and confusing. The Government believes that people’s understanding of what they pay could be better, and is today publishing Modernising the Administration of the Personal Tax System; a discussion paper setting out a range of ideas how people can more easily access information on their personal taxes.
The Government is calling on taxpayers, representative bodies, and tax professionals to give their views on:

• what taxpayers know about the tax they pay;
• what areas of the personal tax system create the most difficulty;
• how technology can help them better access and understand their tax position; and
• how we can engage with individual taxpayers in hearing their views on how the tax system could be modernised.

In parallel, and as part of its ongoing reform of the UK tax system, the Government is publishing a paper setting out the next steps in its work on looking at the options to integrate the operation of income tax and National Insurance contributions (NICs). The paper summarises the results of the recent call for evidence on this issue, and establishes the principles and parameters by which Government will assess options for reform. The Government is establishing technical working groups to identify and explore options over the coming months, and is looking for employers, tax and payroll professionals to join these groups.

David Gauke, said:

“At the moment, for a lot of people, the tax line on their pay slip is the only time they see just how much they’re paying in tax, but the Government doesn’t think that’s good enough. We want to make tax more transparent and we want people to be more engaged with their own tax affairs.

“We plan to lift the lid on tax so that people understand how much they are paying, what their overall tax rate is, and what they should be paying, in the same way that the Government has lifted the lid on what they are paying for.
“We are also exploring ways in which we could integrate the operation of income tax and NICs, with benefits for employers and employees. The Government will be working in partnership with external stakeholders to identify options and will report on progress at Budget 2012.

“Our vision is to transform the customer experience of the personal tax system. The documents published today set the stage for the ideas and innovations that will realise that ambition.”

The Government is also today publishing draft regulations for the introduction of Real Time Information. Real Time Information (RTI) will improve the operation of Pay As You Earn (PAYE) by making the system easier for employers and Her Majesty’s Revenue and Customs (HMRC) to administer and more accurate for individuals.

Notes for Editors

1. Modernising the administration of the personal tax system: Tax Transparency for Individuals is an HMRC discussion document seeking feedback and ideas for how the administration of the personal tax system could be improved to achieve better understanding and make it easier for customers to deal with. It is a 12 week consultation to 24 February 2012. The document is available on the HMRC website here: http://www.hmrc.gov.uk/consultations/index.htm. To respond or enquire about this consultation email: PTAdministration.responses@hmrc.gsi.gov.uk
2. At Budget 2011, the Government announced its intention to look at ways to integrate the operation of income tax and NICs. The objectives of this work are to reduce burdens on employers, remove economic distortions and improve transparency, achieve fairer outcomes for individuals, and reduce government’s administrative costs.
3. Integrating the operation of income tax and National Insurance contributions: next steps summarises the results of the recent call for evidence on this issue and plans for further consultation. It is available on the Treasury website at: http://www.hm-treasury.gov.uk/tax_income_nics.htm. Nominations for membership of the technical working groups should be sent to: incometaxnics.simplification@hmtreasury.gsi.gov.uk
4. RTI will collect and transmit information about tax and other deductions to HMRC every time an employee is paid. HMRC has engaged extensively with employers and other interested parties about the design and introduction of RTI; the relevant documents can be found on the HMRC website: http://www.hmrc.gov.uk/rti/index.htm. In readiness for the introduction of RTI, the document published today presents draft amendments to regulations relating to PAYE, NICs and the Construction Industry Scheme (CIS). This document can be found on the HMRC website: http://www.hmrc.gov.uk/consultations/index.htm.
5. At Budget 2011, the Chancellor set out the Government’s principles for good taxation - our taxes should be efficient and support growth; certain and predictable; simple to understand and easy to comply with; and the tax system should be fair, reward work, support aspiration and ask the most from those who can most afford it.
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