Oh, very cute, very cute indeed

This looks reasonably unremarkable, just a shufling of the details of the system:

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.

But a corollary of this system is that everyone is going to have to file tax returns. So everyone is going to see quite how much tax they pay.

Which will inevitably increase the pressure for lower taxes.

Quite cute really.

13 comments on “Oh, very cute, very cute indeed

  1. This is a ‘devil in the detail’ one, isn’t it? I don’t follow your logic – my pay slip shows gross and net salary, and presumably the bank account will be credited only with net salary (or gross then immediately net) which seems exactly the same?

    “The Tories, who are in talks with various technology providers who are developing the system”

    Oh.

  2. I’ve often wondered if the lower tax rates in the USA are down to the fact that everyone has to file their own tax return annually, and thus gets to see what the State steals from them.

    Whether our infantilised nation could deal with the responsibility of a tax return (all that record keeping, and managing deadlines etc etc) remains to be seen.

  3. What Matthew says.

    We know it won’t work because HMRC (or whoever has bribed the Tories to give them the contract) will never get the codes right.

    This would only work if we had a flat income tax deducted from all income.

    S, no, people can’t cope with getting all bits of paper together, but neither can they in other countries.

  4. I don’t think that’s what they’re saying. It’s more like… employer sends payment to (for instance) Crapita, Crapita take the government’s share and pass the rest to the employee’s bank account.

    Which will be just fine until Crapita spectacularly fail and the payments don’t arrive and people’s direct debits start bouncing.

  5. The bit you all seem to have missed is that this will give the government direct access to your bank account and carte blanche do take from it as much as they like, as often as they like and when they like. Mission creep will soon extend that access to the local council snodgrasses, myriad other agencies and, no doubt, a raft of private ones.

  6. What Matthew says: Devil in the details.

    Payroll is a PITA for small business owners. If the banks can roll it all in to one service, great. If the Government just DDs out what it thinks is right, bad.

  7. Pingback: FCAblog » Goodbye, PAYE?

  8. I’m loving the American system, it’s like D.I.Y. P.A.Y.E. You tell your employer how much to withhold and therefore get to choose your own “net” pay – at least until the end of the tax year.

    Set the level low and you get a tax bill at year end. Set it high and you have your own saving scheme.

  9. This is a heads I win, tails you lose proposal.

    Either the state gets first crack at you income, as Joseph Takagi suggests, opening the way for the eventual barring of transfers that do not go via “Crapita”, or whoever, or the state gets to deduct tax directly from you account, opening the way for arbitrary confiscation of any money you cannot adequately explain.

  10. Oh! C’mon. If you are doing nothing wrong, what have you got to worry about? Just because a few tax/medical/personal details got left on a computer on the train the other day, there’s no need to be paranoid…

  11. I see this as a means to give HMRC the right to take money OUT of our bank accounts at will.

    They will screw up. Guaranteed. We will have to beg for our money back instead of them declaring what we owe/underpay and argue it out.

    All part of the mentality that they have “first call” on our earnings.

    Better we first remove many, then most from, while flattening and then ending income tax.

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