All UK Employees Could Be Paid Directly From The Government in New Proposal

The Telegraph's recent report into the opportunity of HM Revenue and Customs taking

direct charge of every worker's monthly pay is a potential train crash waiting to happen. After all why should we be literally "paying" for the errors of this government institution?

This proposal comes in the wake of recent controversy where approximately 15 million people have been affected by the miscalculation of tax which has led HMRC to make people pay pack underpaid tax. In fact they currently have at least 18 million cases relating to incorrectly paid tax dating back from 2008!

So how would this new scheme operate? Rather than the employers deducting income tax from monthly pay and then paying gross salaries directly to you, the employee, your gross monthly salary would go straight to a so called tax "calculator", run by the HMRC. Once completed they would then transfer the net salary to the worker.

This could in effect signify an end to the traditional monthly payslips, because employers would not be competent to inform you, the employee about the quantity of tax you have paid monthly.

PAYE (Pay as you Earn) is founded on tax codes that reflect each taxpayer's annual salary. However according to some accountants they believe the tax system is not recognising the reality of modern working life, where people often have career moves and benefits frequently change.

To ensure more efficient PAYE practices, treasury ministers have advised that employers should provide HMRC with updates every month concerning employees's pay and other financial details. Now is that really fair?

This new founded insight into employees information could provide the basis for a new "centralised deductions" system. Therefore this would allow HMRC an exclusive role look into your monthly pay packets.

To put it briefly instead of you receiving your monthly wage, payslip and all under the deductions system, employers would pay your monthly salary directly into an HMRC run central calculator. Automatic income tax deductions would then be processed with the remainder being passed onto you by HMRC. In addition you would only be capable of discover the amount of income tax paid by asking HMRC.

This has of course raised several alarm bells amongst people who have voiced their opinion about them. Brian Stenhouse from Armstrong Watson, a company that runs payroll services for over 2,000 companies declared people should have "deep concerns" regarding the central deductions scheme.

Employee financial difficulties and mortgage defaults are also expected to increase in the new year with the new standard rate of tax at 20% on all purchased products. During the recession, the UK has seen a 400% increase in workers seeking emergency short term loans or payday loans and the figures show no signs of slowing.

He further added, "Are people going to be happy to give HMRC their bank details and trust HMRC to make the right deductions and pass on their salary every month? Given they're not going to have a complete monthly payslip any more, people will be in dark about what's been deducted. And if there is an error, they'd be reliant on HMRC to correct it."

Treasury insiders believe ministers had made no decision yet on revamping the PAYE system, but insisted the coalition government is determined to provide a more accurate system.

Another source added, "Labour left the tax system in a mess and we are determined to clean it up." Looks like this is set to rumble on for some time longer.

All UK Employees Could Be Paid Directly From The Government in New Proposal

By: thomthom101

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