From July 2017 HMRC will start to use real time information to update employees’ PAYE tax codes on a month-by-month basis.
According to HMRC this change in procedure will:
Up to now, where an employee’s circumstances change any adjustments are dealt with after the tax year end whereby tax codes are adjusted for any underpayments in a subsequent tax year. Under the new procedure, once HMRC are aware of any changes in circumstances, they will amend the individual’s tax code and follow it up with a notification of the amendment to the employee. A copy notification will also be sent to the employer.
Employees may see more deductions in codes for 2017/18 as this will be a transitional year. Any tax underpaid for 2016/17 will be recovered alongside any remaining tax underpayments due for 2015/16.
It should be noted that no more than 50% of a person’s pay can be deducted through PAYE so any large tax underpayments may have to be carried forward or assessed separately.
26/07/2017
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