The end of the hated annual tax return will be signalled by the Chancellor today. George Osborne will use his last Budget before the General Election to unveil digital tax accounts for millions who currently have to complete self-assessment forms. They will work like online bank accounts and keep an up-to-the-minute record of all the tax someone owes or has paid. George Osborne will unveil digital tax accounts for millions in his Budget today . New digital tax accounts are designed to end hassle for individuals but also boost business by significantly cutting down on red tape. Individuals and firms can already choose to fill in their annual tax return online, but this is simply the paper form on a website. Once a year, and a year behind, taxpayers have to send HMRC information it already holds on income – meaning many people end up with tax affairs that are out of date and incorrectly coded. They have only one opportunity a year to interact with tax officials to reconcile their account and notify them of any change of circumstances. The digital accounts will allow such updates at any time. It will mean users can see all the taxes they need to pay without having to complete a tax return, and pay taxes they owe when it suits them – by linking to their bank account so they can pay in instalments or by direct debit, for instance. There will be particular advantages for businesses, which currently have to pay different taxes at different times, including VAT, corporation tax, income tax and National Insurance. By early 2016, all five million small businesses and the first ten million individuals will have access to digital tax accounts. All businesses in the UK and 55million individuals will have one by the end of the next Parliament. Those who have difficulty gaining access to the internet will continue to be allowed to submit paper returns, or be offered support. Officials claim the system will cut the time it takes to complete tax returns from an average of 40 minutes to just ten minutes a year. The accounts will allow tax to be paid at any time and will radically simplify the payment of various levies for businesses. Because the system will be automatically updated with information from employers, pension providers or banks, taxpayers will not have to submit duplicate information about their income. The populist reform is the centrepiece of an intensely political Budget. Mr Osborne will hail the Government’s economic record, saying 1,000 jobs a day have been created during its time in power – more than the rest of the EU combined. The Chancellor will seek to frame the choice facing voters as one between an economic plan that is working but only half complete, and the ‘chaos’ of a weak Labour government. Other Budget announcements are expected to include: . The Chancellor is expected to say: ‘The critical choice facing the country now is this: do we return to the chaos of the past? Or do we say to the British people, let’s work through the plan that is delivering for you? ‘Today we make that critical choice: we choose the future. We have a plan that is working – and this is a Budget that works for you.’ Falling inflation and lower borrowing costs are expected to slash the Chancellor’s projected borrowing bill by around £20billion over the next five years. Officials claim the online system will cut the time it takes to complete tax returns from an average of 40 minutes to just ten minutes a year . Better-than-expected borrowing forecasts mean that by the end of the next Parliament, Mr Osborne is expected to have £10billion a year to play with if the Tories remain in power. This would allow him to fund his commitment to raise the income tax threshold further to £12,500, and the 40p rate threshold to £50,000 by 2020. But officials insist there will be no debt-funded ‘giveaways’, saying any tax breaks must be paid with public spending cuts or tax increases elsewhere. The Chancellor says he will raise £5billion in the next Parliament by cracking down on tax avoidance, including a new ‘Google tax’ to stop big multi-national firms shifting profits around in efforts to avoid paying tax in the UK. The lifetime allowance of tax-free pension savings is likely to be cut from £1.25million to £1million – as revealed in the Mail this month. The move would jeopardise Labour’s plans to use cuts to pension tax relief to fund a reduction in student tuition fees to £6,000 a year. Savings of up to £40,000 a year qualify for tax relief with a limit of £1.25million over the lifetime of a pension pot. Above this, a tax of 55 per cent applies. A lifetime allowance of £1million would cap final-salary scheme payouts at £50,000 a year and defined-contribution payouts at around £26,000 a year. The news comes as it emerged that George Osborne is expected to let widows, widowers and surviving civil partners of police or firemen killed on duty to keep their spouse’s pension if they remarry. At the moment, they lose their pension if they remarry or move in with a new partner. The Government recently changed the rules on this for Armed Forces spouses.
George Osborne will use his last Budget to unveil new digital tax accounts . Self-assessment forms will change and work like online bank accounts . Officials say it will tax returns from average 40 minutes to just 10 minutes . Accounts will allow tax to be paid at any time simplify business payments . Other budget announcements to include a hike in income tax threshold . Also cut in lifetime pension allowance and a review of business rates . Another hike in the income tax threshold to around £11,000, benefiting anyone earning up to £100,000 . An increase in the annual levy on banks’ balance sheets, to raise £2.5billion a year . A cut in the lifetime pension allowance from £1.25million to £1million, hitting the wealthiest . Freedoms for five million pensioners to cash in their annuities and new incentives for savers . A tweak to deficit reduction plans to undermine Labour’s claim the Tories would cut spending to 1930s levels – instead promising a state the size of that overseen by Tony Blair in the 2000s . A review of business rates to boost small businesses and high streets . Measures to create a ‘northern powerhouse’, with high-speed rail links between northern cities . An accelerated sale of tens of billions of pounds worth of mortgages and loans taken on by taxpayers during the financial crisis.