Taxation: Self-assessment and PAYE

Treasury written question – answered on 30th March 2010.

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Photo of Ian Liddell-Grainger Ian Liddell-Grainger Conservative, Bridgwater

To ask the Chancellor of the Exchequer

(1) what the cost under each budget heading was of administering the (a) Pay-As-You-Earn and (b) self-assessment system in (i) 2006, (ii) 2007, (iii) 2008 and (iv) 2009.;

(2) how much it cost to operate PAYE, Self Assessment and national insurance in (a) 2006, (b) 2007, (c) 2008 and (d) 2009, broken down by budget heading.

Photo of Stephen Timms Stephen Timms Parliamentary Under-Secretary (Department for Business, Innovation and Skills) (Digital Britain) (also HM Treasury), Financial Secretary (HM Treasury) (also in the Department for Business, Innovation and Skills)

The information requested is set out in the following table. The figures are based upon an allocation of total costs for the Department. HMRC's reporting systems do not allow for costs to be reported at the level of budget heading.

The figures reflect a period of significant change across HM Revenue and Customs (HMRC) following the merger of Inland Revenue and HM Customs and Excise, and the creation of the UK Border Agency. Consequently, the allocations of overhead costs have not always been consistent as structures change, and improvements are made.

£ million
HMRC's administrative costs
2005-06 2006-07 2007-08 2008-09
Pay-as-you-earn 919.2 944.4 949.3 951.5
Self-assessment 867.1 926.7 805.0 899.3
National Insurance 360.6 338.1 374.0 346.2

A large part of the increase in reported cost between 2005-06 and 2006-07 was due to the introduction of a new financial system in April 2006. This system allowed additional costs that were previously treated as departmental overheads to be directly allocated to business functions. This resulted in the increase of costs directly attributed to income tax functions.

Departmental restructuring during 2007-08 affected the way in which cost allocation data was captured during the year. As a consequence of this, the figure of £805 million for administering income tax self-assessment during 2007-08 is likely to be understated.

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