New PAYE trigger – real time adjustments to tax codes
19 October 2018
Updates will be provided by way of the PAYE issues briefing on GOV.UK – once the functionality becomes live.
HMRC are making the changes in a bid to help people pay the right tax on their income as they earn it. This new trigger will help make sure more customers are on the correct tax code and paying the right tax at the right time. It will also reduce the number of customers receiving unexpected tax bills at the end of the tax year.
The vast majority of PAYE taxpayers won’t notice a change, some however may notice their employer switches them to the correct tax code sooner.
If a customer’s financial circumstances change between 6 January 2019 and 5 April 2019 (the final quarter of the tax year) and the amount of tax due in the current year is affected, HMRC will adjust the tax code, but only start to collect the tax from 6 April 2019, to make any tax changes more manageable for the tax payer.
When HMRC implement the new trigger this could result in employers, pension providers and payroll providers receiving more tax codes over the first few months, but if the codes are operated the volumes should return back to the normal volume.
Further details as they become available will be available in the Employer Bulletin.
We know that the first port of call is quite often the payroll team when an employee is concerned about their tax code, however in line with the HMRC digital strategy HMRC recommend that employees look to their Personal Tax Account in the first instance.
CIPP Policy team value hearing from members about their day to day experiences and look forward to hearing about experience with this latest functionality as it becomes live. Please email us on [email protected].