The government will use the next Budget to announce tax rebates of up to five per cent of an individual's tax bill for those who file self-assessment returns over the Internet, Accountancy Age has learned. The rebate is expected to be confirmed by Gordon Brown in the next Budget in March. The final cap has still to be decided but the Revenue is currently considering a five per cent discount with an upper limit for high earners. Officials are thought to have rejected the idea of fixed discounts of between #15 and #50. Businesses that choose to file electronically will be given similar incentives. The rebate would bring savings of about #200 a year for individuals earning #20,000 who send their returns to the Revenue over the Web. The tax windfall is part of the government's goal to make the Internet more attractive for taxpayers and the wider plan to make all government services electronically accessible by 2008. Combined with wider powers for the criminal investigation of suspected serious tax fraud announced this week, the Revenue expects electronic filing to slash its administrative costs and increase tax yield. Government officials, including e-minister Patricia Hewitt, have recognised that to encourage electronic tax returns a substantial incentive will have to be introduced. 'The problem the government will have is setting the rebate limit at the right level,' said Francesca Lagerberg, senior technical manager for the English ICA's Tax Faculty. 'E-filing will save the Inland Revenue money and administration burdens so the government want people to submit their returns this way. 'They do not want to set the rebate level too low as people won't think the savings are worthwhile.' The plans were announced in the Inland Revenue and Customs & Excise e-commerce paper last week after an initial announcement in the last Budget, but the Revenue has only begun to address the level of the rebate seriously in recent months. Software providers welcomed the news and urged the accountancy profession to quickly embrace e-technology. Digita Open Systems managing director Jeremy Rihll, warned: 'Less than half of accountants in the UK have websites. They need to get on the Internet quickly so they are up to speed with Web issues and raise their awareness. All firms should be gearing up to e-filing.'
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