Member Article

Annual Tax Summaries – but what’s missing?

Once again, HMRC offers a world first in the form of Annual Tax Summaries which will be sent to 24 million people over the coming months. As these have evolved from being little more than a twinkle in the Chancellor’s eye, through bench testing and on to delivery, Weekly Tax Brief has already commented on a couple of occasions.

So what do we think, now that the Annual Tax Summaries have become a reality?

As we see it, these are the key points:

1. Anything which improves people’s engagement with the tax system is to be welcome. It’s good for people to think about how their taxes are spent. However, many people will feel that there is little real difference between these HMRC statements and the council tax versions which are published by local authorities in England and Wales annually.

2. The new initiative may contain some surprises for readers. For example, those who believe that National Insurance Contributions pay for health and welfare expenditure will be in for a surprise.

3. Equally, taxpayers who are opposed to defence expenditure cannot ask for that 5% of their taxes to be allocated elsewhere. The truth is that, while individuals have to pay their taxes, the government chooses how to spend them. HMRC is not sending out the Annual Tax Summaries to give taxpayers any choice about how their taxes are spent. Those choices, as was once observed, are made at the ballot box.

4. So what are the big numbers, and the small ones? In HMRC’s analysis, welfare accounts for almost a quarter of public spending, with UK contributions to the EU budget at the other end of the spectrum, at a little less than 1%.

5. And what does all this cost? HMRC tell us that the cost to print and post the Annual Tax Summaries to around 16 million individuals who pay tax through PAYE is £5.3million (£1.7m printing costs, £3.6m postage and envelopes). Costs have been reduced by providing online summaries for the 8million or so people who file their tax returns online. HMRC hopes that the cost will come down in future where PAYE taxpayers will have a personal digital tax account through which they can access their tax summary.

6. The timing of this initiative couldn’t be more unfortunate as last Friday HMRC announced that its mail centres in Cardiff and Bootle will close, with more regional post rooms also under threat. Surely the announcement that HMRC is to make hundreds of post room staff redundant while spending such a large sum of money on sending out individual Tax Summaries has to leave the taxman a little red in the face?

This was posted in Bdaily's Members' News section by Baker Tilly .