Tax Day 2021: What individuals need to know

Modernising tax administration

A new consultation was published around how tax payments are handled, with the potential of developing a direct debit system of more regular payments throughout the year. The Making Tax Digital process continues apace, with Self-Assessment Tax Returns potentially coming under this regime within the next couple of years.

Tackling non-compliance

The spotlight around tax compliance once again falls on offshore matters, with consultations looking at how HMRC could “better support” taxpayers with their offshore tax obligations, and work with others to improve tax compliance and the collection of tax in this area. Harsher measures against the providers of tax avoidance schemes also look to be on the cards.

Trusts and Inheritance Tax (IHT)

A possible overhaul of the taxation of Trusts has been considered, with consultations running through 2018 and 2019 on this matter seeking views on how to make them more transparent and fair. However, the government appears to have backed off on the idea of fundamental change for now. 

Much the same can be said about Inheritance Tax, with no major changes announced. Instead there will be some easing of reporting regulations brought in. This includes the promise of a 90% reduction of non-taxpaying estates that need to complete an IHT form. The need for physical signatures on an IHT Return being permanently relaxed, and clarification introduced on the need for estates to submit an IHT Return where the deceased was not domiciled in the UK.

Key takeaway

The initial impression from the tax consultation documents that have been released is that there are no major developments in tax relating to individuals. But it does serve to show that the government’s thinking in this area is very much focused on modernising tax administration and strengthening compliance. 

It may however serve a second purpose in limiting the amount of speculation that surrounds future Budget announcements, with the government’s general direction already signalled through the use of these tax consultations. It remains to be seen whether Tax Day becomes a regular fixture in the financial calendar; however we welcome the widespread use of consultations to help develop future policy decisions in a way that is transparent and inclusive.

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