The Conservatives are working on a pilot for a new automated bank-based system that would remove the responsibility of deducting and paying income tax from employers. The new system could save businesses up to £5.5bn according to the Tories and increase revenues to the Exchequer of £1bn., according to the Tories election hopefuls.I don't know where £5.5bn comes from. That sounds like about £200/annum per employed person, which seems a bit high.
Rather than leaving employers to process different tax codes and pay income tax for employees, the new system would automatically deduct income tax and national insurance contributions directly from an employee's gross pay as it is paid into their bank account.How far out of date are the Conservatives? You buy a bit of accounting software and it does most of the donkey work for you. Costs a couple of hundred quid. For most businesses, it's part of a larger software package, so any change is going to be small.
The Tories, who are in talks with various technology providers who are developing the system, said the plans have been made in response to the increasing failures of the current tax system.Oh goody. So, rather than businesses doing their payroll themselves using a bit of software, we're going to be paying the likes of Crapita running a system that will take what the employer puts in and deduct it before it reaches the bank account. See how happy the public are when that goes tits up and they're left without payments arriving in their bank account.
If the Tories really wanted to reduce the burdens of business, they'd scrap VAT and the ridiculous amount of red tape that kicks in once you've got 10 employees. They'd also change employment laws to something closer to right-to-hire and rollback Labour's changes to maternity leave.
H/T Tim Worstall