Justifying the Tax You Pay

HMRC issue personal tax summaries

This week, HMRC began issuing personal tax summaries to around 80% of the taxpaying population, the first of their kind.

Of the 30 million personal taxpayers over 24 million will receive the summaries that will tell them how much tax and NIC they paid during 2013/14 and how this was applied to public spending, e.g. health, defence, overseas aid etc.

Indirect taxes such as VAT, and council tax are not included in the statements.

Someone with taxable income of £45,000 in the year ended 5th April 2014 will learn that the lion’s share of the £11,937 tax and NIC that they paid was spent on welfare, health, defence and state pensions. At the other end of the spectrum, £90 was given to the UK’s contribution to the EU budget and £137 to overseas aid.

The statements will be sent out in batches over several weeks and most will have been sent by mid-December. However, those registered for Self Assessment (8 million) can already access their Tax Summary through HMRC Online Services, provided they have filed a 2013 tax return.

The summaries are the brainchild of Chancellor of the Exchequer, George Osborne, who first heralded them at Budget 2012 in a move designed to make tax more transparent and easier to understand.

Mr Osborne said, “I promised that taxpayers would know much more about how much direct tax they pay and how that money is spent.

Now we’re delivering on that promise by giving 24 million taxpayers a new personal tax summary.

It is a revolution in transparency and it will show how hard working taxpayers have to pay for what governments spend.”

Leading accountancy firm PwC believe that research from their future of tax project demonstrates that people are more inclined to tolerate taxes if they can see how they are spent. The opposite may be true, however, where, for instance, disgruntled taxpayers may resent some of their hard earned cash being given to undeserving foreign countries whose priorities are not those of the welfare of their people.