HMRC plans to scrap year-end PAYE bills
21st October 2016 | News
HM Revenue & Customs (HMRC) has confirmed it plans to adjust taxpayers’ real time tax codes before the 2017-18 tax year, to ensure everyone pays the correct amount of tax.
The Pay As You Earn (PAYE) tax system is to experience a number of changes to ensure that real time PAYE reporting is possible within the remit of the Making Tax Digital project.
HMRC has announced it will utilise the data it holds – and that supplied by employers and pension providers via Real Time Information (RTI) – in a ‘more proactive way’ to ensure more customers finish the tax year having paid the correct amount of tax.
It’s said the new tax code strategy will ensure an individual's tax is completely up to date throughout the year, so that fewer taxpayers end the tax year with an underpayment or overpayment.
The initial phase of HMRC utilising real time PAYE data will ensure the tax authority can amend a taxpayer’s tax code to adjust, correct or retrieve any in-year underpayment that arises as a result of a change to their tax code. The end result is that the tax year will finish balanced for taxpayers, with no unwanted surprises.
PAYE customers that choose to use their personal tax account will be able to claim an in-year repayment and have it paid back to them through their back account.
At present, there are no plans from HMRC to notify employers of code changes any more frequently than each month.
Employers and pension providers will experience a higher volume of coding notices from HMRC due to the increasing frequency of PAYE code changes. It’s hoped the new system will mean that more taxpayers will pay the right amount of tax each year, without receiving year-end bills or tax refunds.