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Govt launches ‘revolution in tax transparency’

The Government has begun sending new annual tax summaries which explain how individuals’ tax is calculated and what it is spent on.

From today, over 24 million people will receive the statements, which were first announced by Chancellor George Osborne in his 2012 Budget.

The summaries will show how much income tax and national insurance contributions have been paid over the financial year and how these have been calculated.

They will also break down an each individual’s contribution to Government spending in areas such as welfare, health, and defence.

The 8 million taxpayers who complete self-assessment returns will have to view their tax summary online, while 16 million PAYE taxpayers who received a tax coding notice from HMRC over the last year will receive their summary in the post, the Government says.

Chancellor George Osborne says: “I promised that taxpayers would know much more about how much direct tax they pay and how that money is spent.

“Now we’re delivering on that promise by giving 24 million taxpayers a new personal tax summary.

“It is a revolution in transparency and it will show how hard working taxpayers have to pay for what Governments spend.”

Labour has attacked the statements, saying they omit key information that would show how much tax people are really paying.

Shadow exchequer secretary to the Treasury Shabana Mahmood says: “This Government’s record on tax is giving millionaires a huge tax cut while everyone else pays more.

“Families and pensioners are paying more in higher VAT, but that tax isn’t part of these statements. And independent figures from the IFS show that by next year families will be £974 a year worse off because of tax and benefit changes since 2010.”

About 20 per cent of taxpayers – including those who haven’t paid income tax in the past year or have missing personal information – will not receive a summary. However, they can use an HMRC tax calculator to estimate their tax bill and see how they contribute to spending.

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. I would prefer that HMRC had enough trained staff to prevent the interminable errors that are being made on individual’s tax affairs than to have an expensive PR exercise that will achieve little and infuriate lots.

    Mr Osborne please don’t sit so close to the Lib Dems—its beginning to warp your view of reality.

  2. Blood pressure pills to the ready. We will finally be able to see how they waste our money. Or will we?

  3. Sadl, becasue it’s not being broken down, y the information we get will propogate the myth that huge amounts of money get spent on welfare compared to pensions.

    Can’t imagine why Osborne & Co would want to propogate that myth….

  4. It’s a shame that this will only include income tax and employee national insurance. If they had also included employer NI, as well as average statistics for VAT and duties, perhaps people could really start to get a sense of what a massive drain their total tax bill is on their earnings.

    Also, on Smithy’s point, it’s a shame that this will only be high level and won’t show the breakdown of welfare costs.

    Finally, I worry that people will associate “small percentage” with “small spending”, which isn’t true. If something is shown as accounting for 1% of someone’s tax money, they may dismiss it as small. But that 1% is still over £7bn a year.

  5. Smithy is on target again!

  6. Be interesting to see just how much of a debate this sparks off.

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