OTS calls for all-in-one tax account for the self-employed

The Office of Tax Simplifications (OTS) has recommended a new Individual Tax Account that combines the features of the current personal tax account and business tax account, meaning all the income of an individual is held in one place.

Welcomed by the Low Incomes Tax Reform Group (LITRG), the report has made other suggestions, such as allowing people to make ad hoc payments towards their tax bills when they have spare income.

The OTS says that the new Individual Tax Account should have a facility to allow for payments to be made at any time and in any amount, allowing complete flexibility for the taxpayer so they can make ad hoc payments if and when they want to.

The report is published as the number of self-employed people is growing, rising from 3.3 million in the year 2000 to 4.96 million this year.

Victoria Todd, Head of LITRG Team, said,“By combining the two existing tax accounts into one, the self-employed individual would get a clearer view of their total income. It should enable people to have an overview of their overall tax position in ‘real time’ if the data is kept up to date by HMRC, relevant third parties and the individual taxpayer.

“Allowing taxpayers to make ad hoc payments would give far more flexibility as to when they make payments and how much they pay at any one time and some self-employed people may find this helpful. LITRG recommends that further work is done to explore the idea in more detail including what impact it may have on DWP benefits and how it would work in practice.”

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