Tax blog for accountants

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Digital Tax Accounts – Initial Phase

written by Editor, 21 October 2015

Guest blog by, Mark Purdue, Product Manager – Tax products

As previously promised, I plan to use this area to post periodic updates on digital tax accounts, and this is my first update.

HMRC have recently announced the initial phase of functionality they will focus on, and they plan to start work later this month.

The work can be split into three categories;
1. Converting existing functionality (XML API’s)
2. Adding capabilities to digital tax accounts, and
3. New functionality, outside of digital tax accounts

Converting existing
Initially converting three areas;
• VAT online
• EC Sales List
• Self Assessment online

The main one of interest to us, is Self Assessment Online, but it should be noted that this change is unlikely to have any noticeable change for the users of our software.

Adding capabilities to digital tax accounts
Again, three areas;
• PAYE Liability and Payments Viewer
• Self Assessment Liability and Payment Viewer
• Online Payments Gateway

The first will be of interest to employers, and allows viewing of payroll liability and payments via your digital tax account.

The second is of interest to Self assessment taxpayers, and will allow view access of your statement of account via your digital tax account.

The third is of interest to all digital account users, and will allow for online payments via the digital tax account.

At Thomson Reuters, we are particularly interested in the view access into the Self assessment statement of account, and making online payments to HMRC, as these are two clear enhancements to functionality in our software that will assist the profession.


Self Assessment online
For this year, this is the category where we will start to see some more immediate benefit.  As before, split into three areas;
• Self assessment pre-population
• National insurance pre-population, and
• Marriage Allowance API

Results from these three areas will start to be published in monthly tranches from November, so we should start to see the true extent of functionality soon.

“Self assessment pre population” will, as the name suggests, form the framework of allowing third party software to query and receive data for pre-population of the SA return.  It won’t be complete at this early stage, but the start of the framework will indicate the direction this area is likely to proceed (e.g. RTI data for a client)

To understand the benefit of “National insurance pre-population” you first need to be aware that the 2016 SA return has a new section to collect Class 2 national insurance contribution (NIC) data.  In addition, the 2016 HMRC computation will also be performing a “maximum NIC” calculation, to ensure NIC is not overpaid.  Obviously, this calculation additionally requires Class 1 NIC data, which is not currently collected on the SA return.  Both these classes of NIC will be populated via this new functionality in the future.

Thirdly, we have “Marriage Allowance” (not to be confused with Married Couples Allowance).  This is the transfer of 10% of personal allowance to your spouse, where certain conditions are met.  The idea behind this area of functionality is third party software being able to query HMRC directly to find out whether a Marriage Allowance claim has been successfully made for a particular client, and therefore to include the additional 10% personal allowance in the computation.

As we find out more information, it will be posted on this blog, so watch this space for further updates.

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