UK Proposes All Paychecks Go to the State First

The discussion document (link below) suggests that instead of sending employee's tax information to the government once a year, modern computing and telecommunications would make it easier for everyone if that information were updated each pay period.

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPort...

In the UK, employers are responsible for calculating and withholding tax, and only self-employed people need to file tax returns on their own behalf. If you change jobs it can be 4-6 weeks before your tax paperwork arrivse at your new employer, because it is sent from your old employer to the treasury from there to your new place of work; during this time you pay 'emergency tax' at the highest rate. Any overpayment is refunded as soon as the new employer has the tax information, but until they get it their payroll will cover themselves by withholding the maximum. This is not a fun thing when you begin working or change jobs, because for a month or so your employer is working on the assumption that you are fabulously wealthy until the Treasury gives them evidence to the contrary, regardless of how much your actual job pays. So everyone who enters/moves within the workforce is taxed like a bank CEO for the first month - something that's a lot more memorable than the refund which comes many weeks later.

Employer filing of payroll and income tax information each pay period would eliminate this archaic practice and make it easier for both employers to do payroll and employees to switch jobs, because the current tax information could be passed back to a new employer just as quickly, eliminating the wasteful (and expensive) disruption. They further suggest that if this worked out well, employers could upload gross pay information and have the treasury do the work of calculating the taxes, which would reduce employers' administrative overhead considerably as they would no longer be required to collect taxes and tax information on behalf of the government. It would also increase employees' financial privacy, since the Treasury would be storing the same information that it does now but it would no longer need to be duplicated in the recorrds of a person's employer for the purpose of calculcating their taxes.

It even states specifically: At no stage would HMRC [the tax collection agency] or its agents have direct access to any money or information contained in the recipient’s bank account or indeed the bank account itself.

The notion that the money is proposed to go to the government first is simply Not True. It's a short document written in plain English. There is no way that CNBC could have interpreted it the way they did unless they are either stupid or dishonest. You've been had.