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The Government wants to simplify the end of year obligations for individuals who have tax deducted from their income. 

These proposals would affect salary and wage earners who have PAYE tax deducted by their employer, and people who have tax deducted on their interest or dividends. For example, when a bank pays you interest on a savings account, it deducts withholding tax. 

The proposed changes would make it easier for individuals because:

  • fewer people would need to interact with Inland Revenue
  • if your sources of income are straightforward, Inland Revenue would send you a tax refund without you having to ask for it or send you a notice of tax to pay
  • it would be fairer
  • Inland Revenue would help you during the year to get your tax right.

The Government has already consulted on some other changes that will improve how individuals’ tax is managed.

You can read about how individuals’ tax is currently managed at How it works now and then about the improvements to come in Improvements underway.

Translations of the summary document and a quick survey are available in Hindi, Tongan, Vietnamese, Khmer, Korean, Maori, Samoan, Simplified Chinese and Traditional Chinese. These can be found in the sidebar.

This online forum discusses proposed changes that would build on the improvements already underway.

The changes outlined in How it could work are:

  • Inland Revenue would use the information it has about PAYE and some investment income to build up a picture of an individual’s tax position
  • Individuals who received only income that had tax deducted from it (for example, salary, wages, interest or dividends) would not need to provide information to Inland Revenue at all (because Inland Revenue would already have that information)
  • Tax refunds or notices of tax to pay above a certain threshold would be issued automatically, in cases where the sources of income are straightforward
  • Inland Revenue would do more during the tax year to make sure individual taxpayers were on the right tax code, and paying the right amount of tax during the year
  • An easier process to get a special tax code
  • Taxpayers who earned income that was not subject to tax (for example, from running a business) would still need to file a tax return but Inland Revenue would make that process easier by tailoring questions based on information from previous years
  • An easier process for claiming tax credits for donations
  • Direct crediting all income tax refunds to your bank account.

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