Exclusions from online filing for 2016/17

HMRC has updated the list of exclusions from online filing and there are some significant additions for 2016/17. A number of members have been informed about this issue by their software providers.

Further details will be available in the May edition of TAXline but in brief:

  • The taxpayers that could be affected include those with total income made up of savings and non-savings income over £32,000 of which the non-savings income is between £11,000 and £16,000, and those with non-dividend income of £27,000 to £32,000 plus dividends which take their total income to over £145,000
  • Where an exclusion applies, it is necessary to file a paper return but the deadline for the paper return is effectively extended to 31 January
  • HMRC expects to rectify the issue so that these particular exclusions can be removed for 2017/18 and subsequent years.

It is very disappointing that HMRC has not been able to update its software to take account of all the permutations of the dividend and personal savings allowances from April 2016, particularly following the issues with National Insurance contributions and Marriage Allowance in 2015/16 self assessment returns. We understand that the number of affected taxpayers is in the thousands. The Tax Faculty is discussing the issue with HMRC.

We understand that some software packages will prevent online filing by those affected, others will provide a warning message, but many will allow the return to be filed and the calculation will be incorrect or will be amended by HMRC to give the incorrect result.

Note that TAXline is our monthly tax journal which is sent to all members of the Tax Faculty. Why not join us and then also benefit from free access to our webinars and TAXguides?

Update: the list of exclusions was changed by HMRC again on 11 April 2017. We will publish further information as it becomes available. 

  • The Tax Faculty is currently in discussions with HMRC on the impact of the exclusions from online filing. We will publish more information when it becomes available.

  • If the online filing is allowed by the package but the calculation will be incorrect then surely if it is amended by HMRC it should give the correct result not the incorrect result as stated.

  • What do you expect after two decades of meddling Chancellors, Osborne was probably worse than Brown and certainly he has now made the tax calculations for those on relatively modest incomes and uncomplicated affairs outrageously complex. Why do politicians make stupid promises about tax rates so that they then have to fiddle with the system to raise money.

  • Should we not all go on strike and refuse to submit tax returns until this is sorted out?  It's ridiculous. How is submitting a paper return going to solve the problem? Unless HMRC staff are going to manually do the calculations for each and every affected taxpayer they must have software at their end that will give the correct result. So therefore they should be able to sort the online system out  If it cannot be sorted out then rates for 2016/17 should retrospectively be put back to those for 2015/16.