Changes To The Paye Tax System Using Real Time Information HMRC will, as of the end of May 2017, be using Real Time Information (RTI) to adjust employee tax codes throughout the year, as needed, according to a new announcement.

This new procedure is designed to:

  • Provide greater certainty to employees and employers.
  • Lower the occurrence of unanticipated tax bills.
  • Make sure the amount of tax paid by employees by the end of the tax year is correct.

HMRC’s Policy Paper briefing ‘Changes to our PAYE Tax System – helping customers pay the right amount of tax on time’ provides further information on the recent change. In addition, more details are located in April 2017’s Employer Bulletin (Issue 65, page 4).
HMRC’s paper states that employees will be given a revised tax code if there is a change in their situation. This marks a significant difference from the existing system, which only tackles adjustments after the end of the tax year, and applies coding adjustments in subsequent tax years when there has been an underpayment.

Those employees who are affected will soon receive notices that clarify the changes and tell them what to do if they require any help with managing their taxes.
Once the new system is up and running, whenever HMRC detect that an individual’s situation has changed, the employee’s tax code will be amended and a notification of that change will be sent to the individual. The employer will also receive a copy of the notification. Employees and employers should let HMRC know of any change in someone’s circumstances at the earliest opportunity. HMRC has advised employers to be prepared for employee questions regarding coding changes from 1 June. The long-term expectation is that, as a result of this change, HMRC will receive fewer enquiries from employees relating to over- or under-payment of tax.
For assistance with payroll or tax code issues, please contact us.