Budget 2024

[ukmtk]

When I briefly worked in the US for my employer they hired an accountant to complete our tax returns.
When I briefly saw it I thought it was a complete nightmare!

I have filled a few UK ones some years ago.
Then HMRC told me I didn't have to bother as PAYE covered me.

My sister hated filling it in - she simply sent a sheet of paper with a few numbers on saying this is what I earned and this is the tax I paid.
The HMRC accepted the sheet in her case.

[Lootman]

I prefer to do a SA and have no tax withholding, to the alternative. And then just settle up once a year. That way the taxman never owes me and I feel in control of the process. And since I submit my return on paper, I have no need to have an online account with HMRC, nor to communicate with them in any other way.

Whereas I prefer simplicity.

Nothing can be simpler than zero interaction with the taxman, no withholding, and no online account. As evidenced by the fact that you are complaining about the current system and I am not. You just have to figure out how to work the system as it is and not as you would like it to be.

The trend towards SA has been going on for decades now and will continue. It started nearly 30 years ago under Labour and you really should not still be afraid of it.

When I briefly worked in the US for my employer they hired an accountant to complete our tax returns.
When I briefly saw it I thought it was a complete nightmare!

My wife has to do an annual US tax return. She also has an accountant do that for her. How complicated it is depends on individual circumstances. The normal 1040 can be quite complex but there are the 1040EZ and 1040A forms for simpler situations.

There are also many walk-in tax offices for US filers that millions of people use.

[XFool]

Nothing can be simpler than zero interaction with the taxman, no withholding, and no online account.

Right... That would likely be the case with either a genuine non tax payer, or somebody on the fiddle.

As you say you complete a paper SA tax return I take it neither of those apply to yourself. But them neither does the claim to "zero interaction with the taxman".

As evidenced by the fact that you are complaining about the current system and I am not. You just have to figure out how to work the system as it is and not as you would like it to be.

I do work the system as it is - that is what I am complaining about. We used to have a simpler system, when I didn't need to "work" anything. I preferred that.

The trend towards SA has been going on for decades now and will continue. It started nearly 30 years ago under Labour and you really should not still be afraid of it.

I'm not "afraid" of it, just irritated by it.

[Lootman]

Nothing can be simpler than zero interaction with the taxman, no withholding, and no online account.

Right... That would likely be the case with either a genuine non tax payer, or somebody on the fiddle.

As you say you complete a paper SA tax return I take it neither of those apply to yourself. But them neither does the claim to "zero interaction with the taxman".

By zero interaction I mean no online account, no letters from them, no waiting for a refund, no need to ever ring them, no payment on account.

Doing a SA return is simple, especially if you avoid their online system. I have done paper returns for so long I never think about it. It started when I had rents coming in and was working contracts. Later it was more about CGT from the sale of rental properties and from share portfolios. There is no way PAYE could handle that and I have no interest in subjecting myself to that.

You seem to have the worst of both worlds - PAYE and a SA return. It does not have to be that way.

[XFool]

Right... That would likely be the case with either a genuine non tax payer, or somebody on the fiddle.

As you say you complete a paper SA tax return I take it neither of those apply to yourself. But them neither does the claim to "zero interaction with the taxman".

By zero interaction I mean no online account, no letters from them, no waiting for a refund, no need to ever ring them, no payment on account.

Doing a SA return is simple, especially if you avoid their online system. I have done paper returns for so long I never think about it.

I believe we may have been down this route before...

There is absolutely nothing 'special' about having an online personal tax account (BTW. If you are a UK taxpayer you have one - whether you use it or not) or doing SA online. There is no more or no less "interaction with the taxman" than there is submitting a paper tax return. Completing a paper return and an online return are essentially identical, how could they not be? The results are exactly the same either way. How could they not be? At the end you even get a PDF 'paper' copy of the filled in return, if wanted.

You seem to have the worst of both worlds - PAYE and a SA return. It does not have to be that way.

I don't see how that is any "worse" than a SA return and paying on account (twice a year?). Indeed, nothing confuses me more than looking at my online 'payment account' (no less that I seemingly have to access it via "Your Business Taxes". )

Now, if it was all PAYE and taxed at source - as previously - that would be simpler.

[Lootman]

By zero interaction I mean no online account, no letters from them, no waiting for a refund, no need to ever ring them, no payment on account.

Doing a SA return is simple, especially if you avoid their online system. I have done paper returns for so long I never think about it.

There is absolutely nothing 'special' about having an online personal tax account (BTW. If you are a UK taxpayer you have one - whether you use it or not) or doing SA online. There is no more or no less "interaction with the taxman" than there is submitting a paper tax return. Completing a paper return and an online return are essentially identical, how could they not be? The results are exactly the same either way. How could they not be? At the end you even get a PDF 'paper' copy of the filled in return, if wanted.

I prefer a paper return to dealing with an online account but that was not my central point. Rather that it is possible to have only minimal contact with the taxman by structuring your financial affairs in an optimal way. I much prefer having control over the process rather than be managed by the process.

You seem to have the worst of both worlds - PAYE and a SA return. It does not have to be that way.

if it was all PAYE and taxed at source - as previously - that would be simpler.

PAYE is not possible for most sources of income. In fact it is limited to permanent jobs and occupational pensions. I have not been under PAYE this century so clearly it is possible to avoid it if you make the right choices.

And as stated I prefer to settle up once a year than to constantly have taxes withheld. The money is better in my pocket than somebody else's.

[Nimrod103]

The point being that all BR income tax was already taken at source, via PAYE, deduction from interest and the effective 0% dividend tax rate for BR tax payers. The only people who needed to do SA were higher rate taxpayers (not covered by BR taxation at source) or people with genuinely complex financial affairs. OK, people who were effectively on zero rate income tax also needed to apply to have deducted BRT from interest returned to them.

Then along came Osborne and his 2013 budget. I remember, on the afternoon of his budget, pointing out on TMF that surely the changes implied many more people, even on BRT, would end up needing to complete SA

I prefer to do a SA and have no tax withholding, to the alternative. And then just settle up once a year. That way the taxman never owes me and I feel in control of the process. And since I submit my return on paper, I have no need to have an online account with HMRC, nor to communicate with them in any other way.

In the US every single person has to submit a self assessment tax return and there does not seem to be a problem with that. The UK move to self assessment was a great step forward in my view.

I agree that everybody making a tax return is a good idea. When I lived in Singapore (a long time ago) as I recall this was the system, and the tax assessment was made at the end of the tax year, and the tax then duly became payable. Since the figures for the tax year were finalised, there was none of this guesswork and payment on account, or adjusting people's tax codes numerous times during the year which happens in the UK now..

[XFool]

I agree that everybody making a tax return is a good idea. When I lived in Singapore (a long time ago) as I recall this was the system, and the tax assessment was made at the end of the tax year, and the tax then duly became payable. Since the figures for the tax year were finalised, there was none of this guesswork and payment on account, or adjusting people's tax codes numerous times during the year which happens in the UK now..

Yes. But you do realise why this occurs now? It is a direct consequence of the system we have now! Before Osborne it was largely unnecessary for many people who were on fixed wages/salaries/pensions.

Take me, I was retired I had a pension. What that fixed pension was, for the year ahead, was known to HMRC and myself at the start of the tax year - as it is now, as it also is now for my SP. The tax code and tax were fixed and known at the start of the year, they were deducted by 'PAYE'. That is why all I needed for my personal 'tax SA' for the year ahead was a Post-It-Note and a couple of minutes time. Did I have other, variable income (such as interest and dividends)? Yes I did. But, as they were taxed at source, everything was done and dusted before even the start of the tax year. And no HMRC SA necessary.

That's what I call simple!

Yes, now my Tax Code is not infrequently adjusted also - in semi real time - during the tax year. My Personal Tax Code can represent a negative Personal Tax Allowance, as it does currently. Why? Because, of course, the figures for tax deductions are not known at the start of the year, even to me. The tax on my pension is no longer simply tax on my pension, it is tax on my pension plus tax on my state pension plus tax on my (variable) interest plus tax on my (variable) share dividends. Plus I now need to do an HMRC SA - can you see why?

I call this 'complicated' - not unreasonably so, I feel.

[Nimrod103]

I agree that everybody making a tax return is a good idea. When I lived in Singapore (a long time ago) as I recall this was the system, and the tax assessment was made at the end of the tax year, and the tax then duly became payable. Since the figures for the tax year were finalised, there was none of this guesswork and payment on account, or adjusting people's tax codes numerous times during the year which happens in the UK now..

Yes. But you do realise why this occurs now? It is a direct consequence of the system we have now! Before Osborne it was largely unnecessary for many people who were on fixed wages/salaries/pensions.

Take me, I was retired I had a pension. What that fixed pension was, for the year ahead, was known to HMRC and myself at the start of the tax year - as it is now, as it also is now for my SP. The tax code and tax were fixed and known at the start of the year, they were deducted by 'PAYE'. That is why all I needed for my personal 'tax SA' for the year ahead was a Post-It-Note and a couple of minutes time. Did I have other, variable income (such as interest and dividends)? Yes I did. But, as they were taxed at source, everything was done and dusted before even the start of the tax year. And no HMRC SA necessary.

That's what I call simple!

Yes, now my Tax Code is not infrequently adjusted also - in semi real time - during the tax year. My Personal Tax Code can represent a negative Personal Tax Allowance, as it does currently. Why? Because, of course, the figures for tax deductions are not known at the start of the year, even to me. The tax on my pension is no longer simply tax on my pension, it is tax on my pension plus tax on my state pension plus tax on my (variable) interest plus tax on my (variable) share dividends. Plus I now need to do an HMRC SA - can you see why?

I call this 'complicated' - not unreasonably so, I feel.

But your tax affairs are simple, and if I might say so, not so common today. Young people especially are totally at home with balancing income from multiple employers and perhaps several other jobs which bring in money. My daughter in law has 4 different income streams, one of which is from Europe, so cannot be taxed at source. Her income throughout the year is not predictable. That is the reality of the modern World.

[Lootman]

Yes. But you do realise why this occurs now? It is a direct consequence of the system we have now! Before Osborne it was largely unnecessary for many people who were on fixed wages/salaries/pensions.

Take me, I was retired I had a pension. What that fixed pension was, for the year ahead, was known to HMRC and myself at the start of the tax year - as it is now, as it also is now for my SP. The tax code and tax were fixed and known at the start of the year, they were deducted by 'PAYE'. That is why all I needed for my personal 'tax SA' for the year ahead was a Post-It-Note and a couple of minutes time. Did I have other, variable income (such as interest and dividends)? Yes I did. But, as they were taxed at source, everything was done and dusted before even the start of the tax year. And no HMRC SA necessary.

That's what I call simple!

Yes, now my Tax Code is not infrequently adjusted also - in semi real time - during the tax year. My Personal Tax Code can represent a negative Personal Tax Allowance, as it does currently. Why? Because, of course, the figures for tax deductions are not known at the start of the year, even to me. The tax on my pension is no longer simply tax on my pension, it is tax on my pension plus tax on my state pension plus tax on my (variable) interest plus tax on my (variable) share dividends. Plus I now need to do an HMRC SA - can you see why?

I call this 'complicated' - not unreasonably so, I feel.

But your tax affairs are simple, and if I might say so, not so common today. Young people especially are totally at home with balancing income from multiple employers and perhaps several other jobs which bring in money. My daughter in law has 4 different income streams, one of which is from Europe, so cannot be taxed at source. Her income throughout the year is not predictable. That is the reality of the modern World.

Yes, PAYE-only is surely just for people with unsophisticated financials. The PAYE system cannot handle capital gains, rents, contract work, self-employment, foreign income and a host of other income streams.

Also you still have to check that your given PAYE code is correct and that involves the very same calculations you have to do for SA anyway! So why not just do SA and not have to deal with tax withholding?

[XFool]

The PAYE system cannot handle capital gains, rents, contract work, self-employment, foreign income and a host of other income streams.

Also you still have to check that your given PAYE code is correct and that involves the very same calculations you have to do for SA anyway!

Do you, why? It's for HMRC, via its software, to do that. Indeed, it cannot (now) be "checked" until the end of the year - anyway, that is the current situation.

My point was that - at least for me and I bet for others around here, the previous system was simpler. Certainly so for BR taxpayers.

So why not just do SA and not have to deal with tax withholding?

I already explained this, above. "Tax witholding" was no bother whatsoever and no SA needed. What could be simpler?

[Lootman]

The PAYE system cannot handle capital gains, rents, contract work, self-employment, foreign income and a host of other income streams.

Also you still have to check that your given PAYE code is correct and that involves the very same calculations you have to do for SA anyway!

Do you, why? It's for HMRC, via its software, to do that. Indeed, it cannot (now) be "checked" until the end of the year - anyway, that is the current situation.

If you want to "trust" that HMRC is applying the correct amount of withholding then that is your right and it is touching that you have such respect for their abilities. It may irk you to have to do a SA return but at least that assures that any mistakes that HMRC makes can be rectified. Albeit a year later and meanwhile you have made them an interest-free loan.

If we have to have tax withholding, and I have successfully avoided it for decades, then I would prefer the US system where the taxpayer chooses his or her own withholding code rather than have it imposed by big brother.

[kempiejon]

Look past Starmer and Reeves, to the backbenchers - hamas supporters, purple haired socialists and unhinged greens.

I propose, brother, that we move as urgently as possible to instigate an International 'Spot the Purple Haired Socialist' Day.

We were talking just the other day about the mad, swivel-eyed loons. I had forgotten that term. I thought perhaps purpled haired socialists had a similar providence but couldn't find it.

[XFool]

Do you, why? It's for HMRC, via its software, to do that. Indeed, it cannot (now) be "checked" until the end of the year - anyway, that is the current situation.

If you want to "trust" that HMRC is applying the correct amount of withholding then that is your right and it is touching that you have such respect for their abilities. It may irk you to have to do a SA return but at least that assures that any mistakes that HMRC makes can be rectified.

But, as I am using the HMRC online system to calculate my tax, I am anyway relying on that to compute the correct tax. One always has to rely on somebody or something, one way or another.

Albeit a year later and meanwhile you have made them an interest-free loan.

But why assume they always owe me money? Sometimes they do, sometimes I could owe them.

If we have to have tax withholding, and I have successfully avoided it for decades, then I would prefer the US system where the taxpayer chooses his or her own withholding code rather than have it imposed by big brother.

If I may just say so, Lootman, your 'issues' with these practical subjects seems to me as possibly due to you importing too much political ideology into the matter.

[Lootman]

If you want to "trust" that HMRC is applying the correct amount of withholding then that is your right and it is touching that you have such respect for their abilities. It may irk you to have to do a SA return but at least that assures that any mistakes that HMRC makes can be rectified.

But, as I am using the HMRC online system to calculate my tax, I am anyway relying on that to compute the correct tax. One always has to rely on somebody or something, one way or another.

I do not believe that I ever rely upon HMRC to determine my correct tax due. Indeed the whole point of SA is that the taxpayer independently computes the tax owed. And 99% of the time the taxman accepts those numbers. (*)

So SA is the antithesis of a PAYE type system where a black box computes your tax and you really do not understand how they did that. Now you may have a point that the HMRC online system is itself a black box. But that can be avoided by doing the sums independently. After all the tax rules are public information and you can do the numbers manually.

(*) Presumably the taxman likes SA because it pushes all the work out to us, saving them staff and salaries. Any extra losses due to mistakes and fraud are presumably deemed to be less than what is saved in costs.

[tjh290633]

But, as I am using the HMRC online system to calculate my tax, I am anyway relying on that to compute the correct tax. One always has to rely on somebody or something, one way or another.

I do not believe that I ever rely upon HMRC to determine my correct tax due. Indeed the whole point of SA is that the taxpayer independently computes the tax owed. And 99% of the time the taxman accepts those numbers. (*)

So SA is the antithesis of a PAYE type system where a black box computes your tax and you really do not understand how they did that. Now you may have a point that the HMRC online system is itself a black box. But that can be avoided by doing the sums independently. After all the tax rules are public information and you can do the numbers manually.

(*) Presumably the taxman likes SA because it pushes all the work out to us, saving them staff and salaries. Any extra losses due to mistakes and fraud are presumably deemed to be less than what is saved in costs.

When I was self employed and did a tax return, I always got a printout of the calculations.

It's easy enough to check the calculations.

TJH

[Charlottesquare]

Yes. But you do realise why this occurs now? It is a direct consequence of the system we have now! Before Osborne it was largely unnecessary for many people who were on fixed wages/salaries/pensions.

Take me, I was retired I had a pension. What that fixed pension was, for the year ahead, was known to HMRC and myself at the start of the tax year - as it is now, as it also is now for my SP. The tax code and tax were fixed and known at the start of the year, they were deducted by 'PAYE'. That is why all I needed for my personal 'tax SA' for the year ahead was a Post-It-Note and a couple of minutes time. Did I have other, variable income (such as interest and dividends)? Yes I did. But, as they were taxed at source, everything was done and dusted before even the start of the tax year. And no HMRC SA necessary.

That's what I call simple!

Yes, now my Tax Code is not infrequently adjusted also - in semi real time - during the tax year. My Personal Tax Code can represent a negative Personal Tax Allowance, as it does currently. Why? Because, of course, the figures for tax deductions are not known at the start of the year, even to me. The tax on my pension is no longer simply tax on my pension, it is tax on my pension plus tax on my state pension plus tax on my (variable) interest plus tax on my (variable) share dividends. Plus I now need to do an HMRC SA - can you see why?

I call this 'complicated' - not unreasonably so, I feel.

But your tax affairs are simple, and if I might say so, not so common today. Young people especially are totally at home with balancing income from multiple employers and perhaps several other jobs which bring in money. My daughter in law has 4 different income streams, one of which is from Europe, so cannot be taxed at source. Her income throughout the year is not predictable. That is the reality of the modern World.

Actually very common. I still do returns for two pensioners (former clients, each had a business long time back) both with state pension/occupational pension/interest and divs over savings allowances. Both are caught within SA though both are taxpayers in the £20k to under £30k bracket. Presently costs them nothing as I do both returns with no charge, when I stop having access to tax software they will both end up paying minimum £250 a year or more to an accountant who charges. (I have 2023/24 to go and 2024/2025 and then I will bow out)

[Lootman]

I still do returns for two pensioners (former clients, each had a business long time back) both with state pension/occupational pension/interest and divs over savings allowances. Both are caught within SA though both are taxpayers in the £20k to under £30k bracket. Presently costs them nothing as I do both returns with no charge, when I stop having access to tax software they will both end up paying minimum £250 a year or more to an accountant who charges. (I have 2023/24 to go and 2024/2025 and then I will bow out)

£250 to prepare a tax return is a good deal My accountant charges over £400, plus VAT of course.

That said it is worth the money to know it is done right. It makes tax return time painless for me. And some of the advice given over the years has saved me more than the fees.

[Gerry557]

But, as I am using the HMRC online system to calculate my tax, I am anyway relying on that to compute the correct tax. One always has to rely on somebody or something, one way or another.

I do not believe that I ever rely upon HMRC to determine my correct tax due. Indeed the whole point of SA is that the taxpayer independently computes the tax owed. And 99% of the time the taxman accepts those numbers. (*)

So SA is the antithesis of a PAYE type system where a black box computes your tax and you really do not understand how they did that. Now you may have a point that the HMRC online system is itself a black box. But that can be avoided by doing the sums independently. After all the tax rules are public information and you can do the numbers manually.

(*) Presumably the taxman likes SA because it pushes all the work out to us, saving them staff and salaries. Any extra losses due to mistakes and fraud are presumably deemed to be less than what is saved in costs.

I have experienced problems with how taxes were calculated, simple arithmetic not adding up and having 13 months in a year! Hopefully they employ better ones today that at least agree with the last one that contacted you.

[Charlottesquare]

I still do returns for two pensioners (former clients, each had a business long time back) both with state pension/occupational pension/interest and divs over savings allowances. Both are caught within SA though both are taxpayers in the £20k to under £30k bracket. Presently costs them nothing as I do both returns with no charge, when I stop having access to tax software they will both end up paying minimum £250 a year or more to an accountant who charges. (I have 2023/24 to go and 2024/2025 and then I will bow out)

£250 to prepare a tax return is a good deal My accountant charges over £400, plus VAT of course.

That said it is worth the money to know it is done right. It makes tax return time painless for me. And some of the advice given over the years has saved me more than the fees.

Certainly bottom end price for two pensions, a few dividends and some bank interest , but still possibly profitable.

I envisage typing in two pension figures, type in say two interest figures with the sort of stockmarket portfolio that remains constant re holdings year on year, so b'fwd in software, import from embedded dividend database the year's divs per share with their payment dates and all, apart from review, is then done. The actual time to complete such a return, if all data handed over at outset, is circa 5-10 minutes data input tops. Once done year one/client take on/risk assessment/ ML for new client at outset suspect I could do whole lot, inc fee/communication, advise any tax due in well under an hour. (set up in practice management software with standard e mails/advising any tax due/proforma payslip etc whole job could be easily done in 20 minutes)

The key with these is good software and well trained clients re passing over the information /paperwork (though as clients get older this tends to involve more work)