Page 5 - Addition Autumn 2017
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HMRC recently unveiled a new policy of adjusting employee tax codes during the course of the tax year, in a bid to improve certainty and help ensure taxpayers pay the ‘right amount’ of tax.
According to HMRC statistics, a total of around eight million individuals overpay or underpay their tax every year, with overpayments accounting for two-thirds of this number.
HMRC has announced that, under the new
system, they will use the information submitted
by employers via Real
Time Information (RTI) to make adjustments to an individual’s tax code in- year, rather than waiting to calculate adjustments after the end of the tax year. It is hoped that this will enable them to combat incorrect payments more quickly and remove a degree of uncertainty from taxpayers.
Once HMRC is aware of a change in an individual’s circumstances, it will issue a new tax code and will write to the employee regarding the change,
with a copy noti cation being sent to the employer. Unlike the previous system, under which it could take up to two years for an individual’s tax account
to be ‘balanced’ following an underpayment, HMRC believes that the changes will help more people to ‘pay the right tax at the right time’.
The impact of the changes
Some employees will see an impact on their pay packets, as HMRC seeks
to recover all of the tax due within the course of the current tax year. While employers may experience an increase in the number of tax codes they receive, and an increase in the volume of queries from employees relating to the changes, HMRC anticipates that there will be fewer queries relating to tax codes and payments in the long term.
Employers and employees are advised to ensure that HMRC is made aware of any changes in an individual’s circumstances as soon as possible. Routine PAYE RTI submissions will continue as normal.
We can help with all aspects of PAYE. Please contact us for further advice and assistance.
Essential sites for business owners
Network for those seeking small business and entrepreneurial support and advice. government/ organisations/institute- for-apprenticeships
Provides employers
with guidance on apprenticeship standards.
Up-to-date tax and business news.
Forum for users to share ideas in regard to tax and business issues.
addition • autumn 17 • Issue 39 | 5

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