02 Aug Changes in updating PAYE Tax Codes
Changes in PAYE Tax Codes
From the beginning of July 2017 the government will be improving the way taxpayers pay tax through their salary and wages under PAYE.
Historically Tax Codes changed at the end of the year but if you have a change of circumstances within that year you could pay too much or not enough tax.
Because all employers now file regularly with HMRC, records are kept up to date and HMRC will be made aware of changes in circumstances straightaway.
The new system means if you do have a change in your tax code will be updated in real time, resulting in the correct amount of tax being applied from the moment your circumstances change and removing the issue of unpaid or overpaid tax accumulating during the tax year.
Facts from HMRC
- around 8 million customers underpay or overpay their tax each year
- two-thirds of these customers (5.5 million) overpay tax, of which just over 50% are the lowest paid, earning under £15,000 a year
- the old system can take up to two years for an individual’s tax account to be balanced after an underpayment has occurred
Most tax payers will not see any change but it will prevent under and over payments from building up over time.
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