Policy paper

OTS to review smarter ways to use third party personal tax data

OTS outlines scope of a new review looking at the considerations, impacts and priorities HMRC should focus on in this area.

Documents

Details

This new review will explore the opportunities set out in the government and HMRC’s ten-year Tax Administration Strategy for ‘smarter use of data on taxpayers and their activities – pre-population of tax returns, including with data from third-parties – to reduce the need for taxpayers and agents to submit additional information that HMRC either already holds or could verify itself’.

The review will look at the principles that should apply in relation to third-party data and taxpayers generally. It will also consider sources of third-party data that it could be helpful to individuals for HMRC to receive, and how this can best be embedded into the next stage of HMRC’s work on the single digital account and system design more generally.

The review will consider the key considerations, impacts and priorities that HMRC should focus on, any stages in which work might best proceed, and what realistic timescales would be.

The OTS has previously considered the potential for third party data in relation to self-employment and rental income in its Tax Reporting and Payments review. This review will focus on personal tax data, potentially including:

  • Bank and building society interest (building on the information already available)
  • Dividends from UK companies and distributions from authorised unit trusts
  • Distributions from UK and overseas open-ended investment companies
  • Pension contributions
  • Gift aid payments to charities
  • Data from investment and wealth managers including information about chargeable gains, excess reportable income, interest, dividends and equalisation payments
  • Insurance bond chargeable events
  • Royalties

The OTS will publish a call for evidence shortly and intends to publish a report outlining its findings in Summer 2021.

Notes for editors

The OTS is the independent adviser to government on tax simplification, challenging tax complexity to help all users of the tax system; it does not implement changes - these are a matter for government and for Parliament.

The OTS works to improve the experience of all who interact with the tax system. It aims to reduce the administrative burden - which is what people encounter in practice - as well as simplifying the rules. Simplification of the technical and administrative aspects of tax are each important, both to taxpayers and HMRC.

Published 17 December 2020