A Complete Guide to Personal Tax Accounts

Tax is something that almost everyone has to navigate at one time or another in their life, and yet few people ever take an active role in managing it. Whether it is the amount of tax you pay on your salary, your tax credits or your state pension, everyone could do with understanding more about their personal tax.

And that is why HMRC launched this particular initiative: the personal tax account. As part of their overall campaign to “make tax digital”, personal tax accounts are now available to everyone for free.

But how do you access yours? And do you really need it? We answer these questions and more.

What is a Personal Tax Account?

Personal tax accounts have been created by HMRC as a mechanism to help individuals manage their tax more effectively and to ensure transparency of information. Launched in 2015, personal tax accounts are free for everyone to use and acts as a central hub for your HMRC-related data.

Historically it has been difficult to keep track of your tax due to the fact that information has been scattered. The personal tax account aims to address this issue, bringing the various areas together in a central location which can be readily accessed online.

Of course, this kind of information is highly sensitive so the government has taken steps to ensure that it is very secure. You will need a Government Gateway ID to log in, and this is subject to two-step verification. This is essential to protect your information and make it as secure as possible. If you already log in to HMRC services for self-employment or tax credits, you may be familiar with the security that is in place.

Being able to access all your financial information should provide you with better knowledge and oversight, and ultimately more control. All of the details contained in your personal tax account are directly relevant to you, so you will not need to scroll through pages of other information to try and find out what you need to know.

What Information is Available in a Personal Tax Account?

One of the easiest ways to describe a personal tax account is like an online bank account, but for taxes. In the same way that you can get information and make changes on your bank account, it is possible to do the same with your taxes via your personal tax account.

Not every single service that HMRC provides is accessible via the personal tax account but there is an enormous range included. And this list is likely to grow even further in the coming years, as HMRC promote their online services more heavily.

At the time of writing, some of the functions and services accessible with a personal tax account includes:

Change of address - you can update your address online

State pension - get an estimated projection of what your state pension will be, while also checking your National Insurance record of contributions

Child benefit - report any changes which might affect your entitlement to child benefit such as a child staying on in education or training.

Tax relief on home working expenses - submit your claim online for allowable tax expenses available for working from home. Note: although the link is contained within your personal tax account hub, it will take you to an external area to complete the claim.

National Insurance - view your record of National Insurance contributions. You can also find, save or print your National Insurance number.

Marriage allowance - transfer a portion of your personal allowance to your spouse or civil partner

Repayments - provide bank details for any money owed to you

Self assessment - although you will need to register for self-assessment separately, you should still be able to view your details on your personal tax account

Track applications - follow the progress of tax forms which have been submitted electronically

Tax credits - check your payments, report any changes and renew a claim are just some of the actions you can take on your tax credits

Paperless - you can ask HMRC to change your account to paperless so all communication is handled online

Income tax - see below.

There are a myriad of functions on the personal tax account which relate directly to income tax. These include:

Tax calculations - double-check whether you paid the correct amount of income tax and identify any under or overpayments.

Tax code - check what your tax code should be

Personal allowance - check your personal allowance and income for the past four years

Changes - inform HMRC about changes which would affect your tax code

Pensions - update your provider information

Employer - update your employer details

Future tax - find out how much tax will be due this tax year

Savings - check any tax due on savings interest

Income estimates - obtain estimates for income from savings and/or interest

Tax code changes - find out why a change to your tax code has been implemented

Income tax has historically been an area which has been very opaque for most individuals. The introduction of the personal tax account aims to rectify this problem and increase visibility and understanding for all users.

How to Create a Personal Tax Account

Everyone has access to a HMRC personal tax account, but you will need to get set up the first time you use it. The login is extremely secure which is imperative because the financial information you will be accessing is highly sensitive.

You will need to be able to prove your identity before gaining access to your personal tax account. This is managed via the Government Gateway which can be found here.

If you already have access to a Government Gateway login you will not need to register again. You can use your existing credentials to sign in straight away.

If you have not registered with Government Gateway before, you will need to create an account. However, the process is quick and simple – we have outlined the steps below.

How to Open a Personal Tax Account with Government Gateway

To register, you will receive step by step instructions on screen to walk you through the process. Here is what to expect:

Before you start, make sure you have your National Insurance number, email address and mobile phone number. You will need all of these to complete the process.

To prove your identity during registration, you will need documentation - this means either your P60, your passport, your bank account details or your last three payslips.

From the home page of the personal tax account government website, click on the green “Start now” button

The next screen will say “Prove your identity to continue” and will offer three options. If you already have a Government Gateway login, you can choose the top option “Use Government Gateway” and then the green “Continue” button

If you do not have a Government Gateway login already, check the third option that says “Create an account” and then the green “Continue” button

For new users, you will reach a page headed “Create an account” which explains what you will need to register. However, as you already have your documents and information ready, you can just click on the green “Create a Government Gateway account” button.

The next screen is headed “Sign in” and if you already have a Government Gateway ID, this is where you will need to enter it and click on the green “Continue” button

If you do not have a Government Gateway, click on the hyperlink at the bottom of the page which says “Do not have a Government Gateway account”

You will now be on a screen headed “Enter your details” - fill in your name and email address. You will also need to create a password.

This will generate a 12-digit user ID which you should take a note of. This is your Government Gateway ID which you will need every time you log in.

The next stage in completing this process is to pass security and you will need a six digit code for this. Click the “Continue” button.

You will have the option to choose how to receive your access code. Pick between the HMRC app, a text message or a voice call. If you have ever completed two-step verification for your bank or payment processors like Paypal, it is exactly the same. Click on the green ‘Continue” button for the next screen.

Depending on which option you selected, you will be taken to a screen to fill in your mobile or landline number. Once you have filled it in, click on the green button at the bottom of the screen to get your security access number.

Once you have your security access number you will need it to enter in the box on screen titled “Access code”. You can choose for your device to remember the code for seven days; only select this option if you are on a private device that you do not share with anyone.

You will now see a message which says “You have successfully set up extra security”. Click on the green “Continue” button to proceed. You will be offered the chance to repeat the previous few steps again to set up a second way to complete the security. You can either do this or click on “I can’t do this right now” to carry on.

The next screen is headed “We just need to confirm who you are” and will go on to ask you some security questions. HMRC already knows the answers to these questions and can verify your identity if you provide the correct response. Click on the “Continue” button again to proceed through these checks.

You will be asked to enter you first and last name, together with your date of birth and National Insurance number. Click on the green “Continue” button once complete.

You can now choose how you want to be verified, and it is where the documents that you gathered before you started the process will come in handy. The screen will state “Choose a way for us to identify you” and will give you three options: payslips, UK passport and P60. Select your preference and then click on the green “Continue”.

You will be asked a series of questions based on the document you have chosen. It is important that you answer this precisely because if the information does not match exactly you will fail the security check.

Depending on what documents you have available, you may be asked some additional questions which relate to areas such as bank accounts, mortgages, loans or past addresses. The questions chosen will be specific to the information that HMRC hold about you. Sometimes when people do not have bank cards or vote or have telephone contracts, either disabled people or new arrivals to the UK from overseas, they will have difficulties getting a Gateway account and will need to call HMRC to manually open an account for them.

Click on the green button and a message should pop up which states “We’ve confirmed your identity”. If HMRC does not hold sufficient information to be able to verify your identity or you cannot answer the questions, you will have to telephone HMRC to resolve the problem.

The final step in the process is where you can opt in or out of emails and switch to paperless communication.

Your registration is now complete and you will be able to view the home page of your Personal Tax account.

Next time you want to access your personal tax account you will not need to register again. Keep the 12-digit number safe together with your password. You will need these to sign on each time.

Previously it was possible to sign in using the GOV.UK Verify service but that is no longer active. If you previously used Verify, you will need to create a Government Gateway account to access your personal tax account.

Do I Need a Personal Tax Account and a Self-Assessment Account?

If you have already registered for self-assessment, then you will be familiar with using online services. However, a personal tax account is different from the self-assessment online tool, and it is useful to have both.

You will not be able to submit your self-assessment tax return using your personal tax account, but you can do so through the self-assessment service once activated on your Gateway account. However, you can use it to help administer your self-assessment account throughout the year.

Some of the functions you can carry on include:

Find your Unique Tax Reference (UTR)
Check your messages about self assessment
View or print your tax calculation from your self assessment
Make an appeal for a late filing penalty from 2015/2016 onwards
Notify HMRC about increasing or reducing profits to alter payments on account for self-assessment

Is a Personal Tax Account Compulsory?

HMRC are encouraging as many people as possible to create a personal tax account because of the information that is available. With a better oversight of your financial data, you will be able to make more informed choices.

Everyone should be able to use a personal tax account, should they want to do so. More services are likely to be added in the future so the functionality will only increase.

You do not have to create a personal tax account login, if you prefer not to. You can still contact HMRC in the traditional way or use paper-based services.

However, HMRC is notoriously difficult to contact via telephone and this is likely to get worse as more services switch to online. Paper-based administration is often longer, and subject to more checks or supporting documentation. This is because it is possible to carry out automated checks online using information you provide on the spot. This eradicates the need for traditional supporting documentation which can be onerous to copy and supply.

For these reasons, it is highly advisable to create a personal tax account. If you choose not to, there will not be any penalties but you might find yourself significantly disadvantaged.

Is the Government Gateway Identity Number the Same as a UTR?

You may have heard mention of a Unique Tax Reference (UTR) but this is not the same as a Gateway ID.

A Government Gateway ID is used to sign into your personal tax account online and to access a wide range of information held within your account. As described above, there are many different features to a personal tax account and it is something that everyone should be able to access.

Not everyone will need a UTR; it is not necessary for the purposes of managing your personal tax account. A UTR is a 10-digit number which is used for completing tax returns. If you are self-employed you will already have a UTR. Just like a National Insurance Number, a UTR stays with you for life. If you lose it, you will not be issued with a new one but you can contact HMRC to get confirmation of it.

Staying Safe Online

As described above, there is very tight security in place to ensure that your personal tax account data and your Government Gateway login remain safe at all times. Although technology provides protection, you can also play your part by ensuring that you keep your password and login safe and do not share it with anyone else.

The security on the account means that scammers may try other means to persuade you to divulge your information. There are a number of emails and texts which circulate on a regular basis which are from scammers.

To avoid becoming a victim, it is helpful to understand the limits of a personal tax account and how you are likely to be contacted by HMRC. Scammers rely on individuals not knowing when an email or text is likely to be fraudulent.

You will never receive an email or text from HMRC with any of the following:

An offer of a repayment
Notification about a tax rebate due
A request for you to provide identifying data such as date of birth, login details etc
Requests for your bank account details
A link to a secure HMRC page to login - even if the links looks genuine, it will not be.
A request to email or get in touch with a non-HMRC address
Attachments - unless you have previously accepted this formally
Requests for financial information - unless you have previously accepted this formally

If you want to communicate with HMRC or check your account you should always navigate to their website and log in using the normal process. Scammers can set up pages that look like the real thing so you should never trust any links which are sent.

HMRC may contact you to tell you there is a message waiting online for you, but they will not relay the content of the message and will not include any links to log in.

If you are ever in any doubt about a communication, check with HMRC by logging into your account using your usual web browser. Never attempt to verify a text or email by clicking on a link that is provided.

How Much Does a Personal Tax Accountant Cost?

Unfortunately, it is not as simple as quoting a single figure, or even a range of costs when calculating how much a personal tax accountant costs.

This is because the experience of the tax accountant, the type of service you are receiving and the complexity of your personal accounts will all help to determine the cost.

For example, if you are only looking for an accountant to complete your tax return without providing any advice or in-depth assessment on your personal taxes, the service will be much cheaper. Conversely, if you are a business who requires technical advice and support while also complying with multiple filing obligations, the cost would clearly be much higher.

With the availability of the online HMRC personal tax account, you might not need the services of an accountant. Once you register for a personal tax account and register for any relevant tax services, you will have full visibility and you should be able to track and submit any information necessary.

However, it as worth mentioning that using a personal tax accountant can save money, as well as ensuring that everything is correct. So, it may be a case of spending a small amount to avoid penalties or to identify efficiencies which are available. Tax law can be complex and there are financial penalties for errors, so the services of a good personal tax accountant can be economically beneficial.

If you choose to use a personal tax accountant, then full transparency over the cost is essential. You can have this conversation with them from the start to ensure you understand the services you will be receiving, their expertise and the price. Feel free to get in touch if you have any questions in relation to this article.