The UK’s Office of Tax Simplification (the OTS is an independent advisory body to the UK government) has opened a consultation on finding ways to make it easier for individuals to submit tax returns through the use of third party data. According to the OTS:
“In this review, the OTS is considering whether and in what ways it could be helpful to individuals and improve their experience of the tax system, for different sources of third-party data to be submitted to HMRC on their behalf. It will explore any concerns they may have and whether and in what ways these could be overcome.The review is considering alternative ways for HMRC to receive and use information that is already provided in some form either by individuals or third parties, rather than considering the provision of new types of information.So for example, instead of millions of individuals having to provide to HMRC details of potentially taxable income and gains on their investments, the review will consider whether it could instead be uploaded by their investment or wealth management company and reflected in their online tax account or self-assessment return.”
The Pensions Age website points to possible implications of this for pension tax relief. According to Steve Webb, partner at LCP, such a change could:
“add millions to the cost of pension tax relief. It is a well-known problem that many people who put money into a personal pension fail to claim the higher rate tax relief to which they are entitled. Making this happen automatically via data sharing between the pension provider and HMRC would streamline this process and help more people appreciate the benefits of saving into a pension.”
Written responses to be sent to firstname.lastname@example.org by 9 April 2021.