Tories to 'reform' PAYE

[Flashman]

http://www.telegraph.co.uk/news/elec...World-War.html

PAYE - Tories plan biggest shake up of income tax system since Second World War The Conservatives are working on a pilot for a new automated bank-based system that would remove the responsibility of deducting and paying income tax from employers. The new system could save businesses up to £5.5bn according to the Tories and increase revenues to the Exchequer of £1bn., according to the Tories election hopefuls.

Rather than leaving employers to process different tax codes and pay income tax for employees, the new system would automatically deduct income tax and national insurance contributions directly from an employee's gross pay as it is paid into their bank account.

So the Tories want HMRC to have an electronic trojan in your bank account?

What the hell ?

[AtW]

So the Tories want HMRC to have an electronic trojan in your bank account?

Tax code should be linked to NI number and money sent to NI account where deductions are made and then next amount is forwarded to employees account.

Accountants might not like this idea.

[SueEllen]

Either idea means more work for some contractors.

[HairyArsedBloke]

To borrow a phrase, "The reports of the death of cash have been greatly exaggerated".

It's too late for me (I'm ), but when are you lot going to rise up and revolt?

You need:

[VectraMan]

Sounds like a good idea to me. There's no reason why the employer shouldn't still make one payment to you, and one bulk payment to HMRC, it's the working it all out and having to keep up with the endless stream of tax code notices that is the problem. In this day and age a computer system should be able to make it all simple (cue cynicism about goverment IT projects).

They should just give businesses a choice. Large business would carry on as they do now; small business would change to this sort of scheme to save on admin; and us one man companies could change to only paying income tax once per year as part of SA.

[HairyArsedBloke]

Sounds like a good idea to me.

ARE YOU FRAKING SERIOUS!


There is no hope

[OwlHoot]

They could streamline the process even further, and preserve complete personal anonymity, by simply taxing banks a fixed percent of all deposits into personal or business accounts, and letting the banks pass on the charges to each account holder. People, and perhaps also companies, might not even have file a tax return.

That's off the top of my head, although I'm sure there would be complications, such as how to deal with expenses and reclaimable overheads.

Of course a system like that would be more than just PAYE. It would amount to a general fund transfer tax, including payments received for anything.

Hmm. Just thought of another snag though - Self-employed would be taxed twice, once when invoices were paid into the company account and then again when dividends and salary were paid into personal accounts. Drat!

[Doggy Styles]

How does that work with contractors?

And what happens when you dispute a demand? They've already taken what they think.

[hyperD]

What's to differentiate between PAYE, dividend, pension, expenses and other fiscal streams into various accounts?

To be honest, it would be simpler to implement a flat rate tax system. Or simply remove tax completely.

[VectraMan]

Hmm. Just thought of another snag though - Self-employed would be taxed twice, once when invoices were paid into the company account and then again when dividends and salary were paid into personal accounts. Drat!

Why tax business accounts? In fact why tax business at all? Do away with CT, and let shareholders pay the full amount of income tax on dividends.