Should The Government Revert to Tax Deducted at Source?

brewerdave

Restoring tax at source for both savings interest and dividend tax, would be a nice little earner for Rachel from Accounts as many 100.000s of the public would never claim the tax paid back even if they were due it back🤣.

It would also create jobs for many of the boys in Accounting firms - so win -win then ……..

Shylock_249

https://forums.moneysavingexpert.com/discussion/comment/81962062#Comment_81962062

Don't allow tax to be claimed back on bank interest. If you get bank interest, tax it. That would make it easier for HMRC.

I'm surprised that the Government together with HMRC haven't done something about the 20% of missing or inaccurate data. Taxing ALL savings interest at source would be the answer IMO.

Better still, don't tax it at all.

eskbanker

I'm surprised that the Government together with HMRC haven't done something about the 20% of missing or inaccurate data

Failures to match records aren't necessarily caused by missing or inaccurate data as such - it's undoubtedly much easier when a unique identifier like NINO is used, but when that isn't the case there's a reliance on matching (inter alia) postal addresses, which are legitimately represented in many different ways.

Taxing ALL savings interest at source would be the answer IMO.

Better still, don't tax it at all.

Not sure if you're being serious, but how would you fill the resulting tax revenue shortfall?

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81962170#Comment_81962170

There is apparently work going on to address that.

https://www.gov.uk/government/consultations/better-use-of-new-and-improved-third-party-data/better-use-of-new-and-improved-third-party-data-to-make-it-easier-to-pay-tax-right-first-time

intalex

https://forums.moneysavingexpert.com/discussion/comment/81963004#Comment_81963004

"let's fill in the NINO for all accounts" ?

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81963025#Comment_81963025

That looks like it will have a two phased approach, split between new and existing accounts.

Reducing data lag is another thing mentioned.

intalex

https://forums.moneysavingexpert.com/discussion/comment/81963032#Comment_81963032

When they get this right and reduce the % of "orphan" bank reported interest to immaterial levels, I imagine the next project that could happen is to start validation against self-assessment, something I'm reading on another thread isn't currently happening even in instances where bank reported interest for multiple years is left out of self-assessments on tha basis of "all interest arisen at maturity".

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81963048#Comment_81963048

I think you are mistaken there.

HMRC have some clever system for matching up data with tax returns and investigating people so it would be naive to think this doesn't happen.

https://www.taxation.co.uk/articles/hmrc-s-connect-computer-and-investigations

intalex

https://forums.moneysavingexpert.com/discussion/comment/81963074#Comment_81963074

I guess I meant a near-exact science kind of validation, much like PAYE and the mechanisms around it. Whilst they say 20% of bank reported interest is not allocated to anyone, once they reduce that KPI to immaterial levels, a separate KPI of the gap between bank reported interest vs self-assessment (per individual) may well come into focus. Either through their clever system, or through a simple comparison (using NINO).

Those not on self-assessment are being pursued for tax on undeclared interest (triggered by bank reported interest), but a different standard of "trust" is being applied to self-assessing individuals and I don't believe HMRC's clever systems are going far enough to validate the "tax interest arisen at maturity" concept to exempt those on self-assessment from pursuit.

Shylock_249

https://forums.moneysavingexpert.com/discussion/comment/81962372#Comment_81962372

https://forums.moneysavingexpert.com/discussion/comment/81962372#Comment_81962372

"Not sure if you're being serious, but how would you fill the resulting tax revenue shortfall?"

Have a look down the back of Angela Raynor's sofa? No, I wasn't being serious.

As the Minister of Good Ideas, I could come up with a long lists of how I'd fill the shortfall but I wouldn't want to be thrown off this forum or have Special Branch knocking on my door. 😊