HM Revenue and Customs is being given “unprecedented powers” to take extra tax from someone’s pay packet the moment it believes they aren’t paying enough, post-Budget reports have revealed.
Current rules mean the taxman must recoup unpaid cash the following year. But a report in the Daily Mail in the wake of Philip Hammond’s Budget package has revealed that from April 2019 HMRC will be able to immediately adjust people’s tax codes.
The change was announced in Budget documents, with the Treasury revealing the taxman will use new technology to collect the unpaid money more quickly.
And that means it could be taken from a person’s salary the month after an error is discovered.
It is a change that is expected to rake in in £125million in extra tax over four years. It has been described by experts as a “very powerful new weapon for HMRC.”
According to the Mail report those who are most likely to be affected by the change will be people in new jobs or have fluctuating income. It could also affect workers with expenses or benefits such as a company car.
Around six million people a year are affected by tax code errors which can mean them paying too much or too little money to HMRC.
Its latest computer software allows it to look at how much workers earn on the PAYE tax system in ‘real time’ – making it easier to spot errors.
HMRC told the Mail: “This measure is about exploiting the potential of new technology to make debt recovery more efficient for the taxpayer and for HMRC.”
It has also been revealed that inheritance tax revenues are set to rise by a third by the year 2023.
The Treasury has revealed that the levy brought in £4.8bn during the tax year to April.
It is forecasting a 35 per cent rise to £6.5bn by April 2023 – an increase driven in the main by increases in house prices.
And that is despite earlier reforms which will see the threshold for paying the 40 per cent tax raised on an estate rising to £500,000 for a single person and £1m for a couple by April 2020.
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