HM Revenue & Customs (HMRC) has said that the new system of online accounts will be similar to online banking and will allow people to see their tax details and make payments at any time of the day or year.
The roll-out for individuals is being phased in for people currently in the self-assessment system. All personal taxpayers will have personal accounts by April 2016, as will all of the country’s five million small businesses.
The Government says one advantage of the new digital tax accounts is that they should stop the build-up of tax due, or refunds owed, at the end of each financial year, with no more surprises or shocks for taxpayers.
HMRC’s aim is that the new digital accounts will encompass all taxpayers, individual or corporate, by 2020. We currently don’t know what the proposal for quarterly submission of income and expense information will mean for GPs. We understand that small partnerships will be included in the initial roll out, although flexibility is promised.
If you are employed, your tax affairs will be straightforward as tax and NIC will be deducted at source before you receive your salary. However, you may consider being self-employed – such as becoming a locum or joining a partnership – or you may already be self-employed. Under self-assessment, individuals pay tax on 31 January and July each year on their self-employed income. On each date a payment on account for the next tax year is paid which is usually half of the previous year’s tax liability.
Once your tax return has been prepared you may have a balancing payment or refund due, depending whether your actual tax liability for the year is more or less than the payments you have already made. If your income has gone up since the previous tax year, you will have a balance due in the following January, together with the first payment on account for the following tax year.
At Milsted Langdon, we act for locum GPs and assist them with their personal tax compliance. We also review partnership accounts and discuss our findings with any GP who is considering joining an existing partnership and we can help with personal tax accounts. For more information, please contact us.