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Government unveils plans for simpler personal taxes

The Government has launched a new consultation setting out its vision for a simpler and more transparent personal tax system.

It is seeking feedback on a number of ideas for reforming the current system, including plans to give every taxpayer online access to their tax records.

Ministers are also seeking views on a possible move to supply pre-filled tax returns to those in the self assessment system, a model that is already used in Denmark.

Under this system, existing information about incomes would be gathered from sources such as employers, banks, pension schemes and letting agencies and then added to the self assessment form before it is sent to the taxpayer.

The consultation, Modernising the Administration of the Personal Tax System, also suggests that taxpayers may be sent an annual tax statement in addition to their P60 and PAYE tax code notice.

Launching the paper, David Gauke, the Exchequer Secretary, said: ‘At the moment, for a lot of people, the tax line on their pay slip is the only time they see just how much they're paying in tax, but the Government doesn't think that's good enough.

‘We plan to lift the lid on tax so that people understand how much they are paying, what their overall tax rate is, and what they should be paying, in the same way that the Government has lifted the lid on what they are paying for,’ he added.

The Government is already consulting on plans to integrate the operation of income tax and national insurance and intends to report on its progress at the 2012 Budget.