Making Tax Digital

Andystriker

Hi everyone.

I am retired and claim Tax back each year on my Private Pension and to do that I have to fill in a self assessment tax return online and enter my savings interest, and any other income.

Unless I am not understanding correctly HMRC are changing the process in 2024 to what they call "Making Tax Digital".

Anyone any idea what this means?  Will I still be able to tell HMRC easily online how much income I've had during the year, or have we all got to get some different software?

Andy

Dazed_and_C0nfused

There should be no need for you to file a return in the circumstances outlined.

I haven't read anything to show how they plan to deal with this under MTD.  

Are you filing unsolicited returns or do they issue a notice to file one each year?

inspectorperez

So far as I am aware, MTD from April 2024 is only applicable for unincorporated businesses and landlords with property income over £10K per annum.

Like you, I am retired and complete an annual SA return. I am not envisaging any changes yet to the current method of filing such returns and expect that this will run alongside MTD filings for those taxpayers required to register under that scheme.

Certainly that was the way MTD for VAT filing was introduced.

Albermarle

I have a 'private pension' + savings interest + 3 months salary in 21/22.

I did not fill in a SA as no need, and HMRC told me not to some years ago. It all gets sorted out automatically and if necessary I can check/update via my personal tax account online.

Like you, I am retired and complete an annual SA return. I am not envisaging any changes yet to the current method of filing such returns

AFAIUI, HMRC have been reducing the number of people filling in SA, where their affairs are relatively simple. I was told I had to stop in fact, but they seem to apply this policy somewhat erratically .

wiseonesomeofthetime

I have no idea how HMRC calculate the tax owed on savings and reclaim it via tax code as I can never corrolate their figures. (Though possibly in my favour. Not everyone reported? Dunno) 

Why they can't just say, you earned £x on Savings Interest, and owe £y, then allow me to pay £y without messing with my tax code and subsequently monthly pension take home figure, I don't know 🤷‍♂️

Would make my budgeting so much easier.

inspectorperez

wiseonesomeofthetime said:

I have no idea how HMRC calculate the tax owed on savings and reclaim it via tax code as I can never corrolate their figures. (Though possibly in my favour. Not everyone reported? Dunno) 

Why they can't just say, you earned £x on Savings Interest, and owe £y, then allow me to pay £y without messing with my tax code and subsequently monthly pension take home figure, I don't know 🤷‍♂️

Would make my budgeting so much easier.

That's one of the reasons why I prefer to file an annual SA return and make an annual tax payment in January to keep my affairs in order. My wife does the same and we are both able to calculate how much we owe in Month 1 of each tax year and set funds aside for subsequent payment the following January.

Daliah

inspectorperez said:

That's one of the reasons why I prefer to file an annual SA return and make an annual tax payment in January to keep my affairs in order. My wife does the same and we are both able to calculate how much we owe in Month 1 of each tax year and set funds aside for subsequent payment the following January.

Same here.  It takes me all of 15 minutes to fill in my SA, and I can be sure the correct amount of interest gets used.

Andystriker

Thanks for replies,

Like inspectorperez I fill in a self assessment tax return because when I was working I owed more tax due to savings interest.  I have had to do this since the banks started paying gross interest.

However I retired in March 2021 and then I got a part time job paying me approx £6,000 per year.  With my savings interest I do not now owe tax, but I started to draw on my private pension and they deducted tax.  So I put this on the return to claim the £90 odd tax back.

I noticed when I filled in this years return online it says that from 2024 the self assessment form will move to making tax digital.  That's why I asked the question with you knowledgeable guys?

Andy

Albermarle

Daliah said:

inspectorperez said:

That's one of the reasons why I prefer to file an annual SA return and make an annual tax payment in January to keep my affairs in order. My wife does the same and we are both able to calculate how much we owe in Month 1 of each tax year and set funds aside for subsequent payment the following January.

Same here.  It takes me all of 15 minutes to fill in my SA, and I can be sure the correct amount of interest gets used.

As I mentioned, you may find at some point that HMRC asks you to stop filling in SA, whether you want to or not.
I preferred SA so I could see the annual tax calculation in detail to see if it was correct. With checking it in the personal tax account it is less clear, and not really possible to double check the calculations.

Maybe this is what they mean by Making Tax Digital, and maybe I was one of a first wave .

Daliah

Albermarle said:

Daliah said:

inspectorperez said:

That's one of the reasons why I prefer to file an annual SA return and make an annual tax payment in January to keep my affairs in order. My wife does the same and we are both able to calculate how much we owe in Month 1 of each tax year and set funds aside for subsequent payment the following January.

Same here.  It takes me all of 15 minutes to fill in my SA, and I can be sure the correct amount of interest gets used.

As I mentioned, you may find at some point that HMRC asks you to stop filling in SA, whether you want to or not.
I preferred SA so I could see the annual tax calculation in detail to see if it was correct. With checking it in the personal tax account it is less clear, and not really possible to double check the calculations.

Maybe this is what they mean by Making Tax Digital, and maybe I was one of a first wave .

I don't think they can stop you from submitting an SA if you wish to make one. It's not an issue for me, as for now, they are actually asking me to complete one every year. I am sure I will cope with MTD if that replaced SA - it would just be a different system, and possibly a more modern one

inspectorperez

Daliah said:

I don't think they can stop you from submitting an SA if you wish to make one. It's not an issue for me, as for now, they are actually asking me to complete one every year. I am sure I will cope with MTD if that replaced SA - it would just be a different system, and possibly a more modern one

I think the only thing is, there will be a cost associated with it. At present it is free to use HMRC own SA return for filing, but the requirement to use MTD will introduce a cost, albeit probably quite small.

I've noticed MTD for VAT costs are as little as £12 + VAT per annum, but the principle of incurring a personal expense to file your annual tax return does seem a bit perverse.