Apr 2017
4
HMRC to update Tax Codes for Adjustments for PAYE throughout the tax year
Currently with HMRC if there is an underpayment of tax that is owed at the end of the tax year the process is that it can be coded out, by means of adjusting the tax code for the employee in the next tax year, or the tax is to be paid by the employee in full. From May 2017 onwards HMRC will make automatic adjustment to Pay As You Earn tax codes using real time information as they occur.
HMRC will be watching the data being submitted from Full Payment Submissions by employers and pension companies from April 2017 onwards. HMRC will then be assessing individuals and projecting whether an employee will be due to have an underpayment of tax by the end of the tax year. Where this occurs HMRC will amend the employee’s tax code in order for the collection of the tax be in the current tax year and not be left owed at the end of the tax year. This proactive approach from HMRC ensures that the majority of tax owed will be collected in the same tax year.
