Is your payroll department ready for the 2017 changes?
As part of Making Tax Digital, HMRC plans to make adjustments to taxpayers’ tax codes in as close to real time as possible so employees pay the right amount of tax within the current tax year.
HMRC plans to introduce these changes for the 2017-18 tax year. The PAYE system itself is not changing as such, but a number of changes will be introduced, including:-
- HMRC will use the information it receives in a ‘more proactive way’ to ensure tax codes are more accurate; and
- HMRC’s new approach to timely code adjustments will aim to keep tax completely up to date in the year so that more taxpayers pay the right amount of tax in the current tax year.
The first phase of the new regime will enable HMRC to further change tax codes to adjust, correct or collect any estimated in-year underpayment that arises as a result of a change to a tax code. This should mean more taxpayers will pay the correct amount of tax for the year rather than being subject to post tax year underpayment or overpayment adjustments.
HMRC does not plan to notify employers of code changes any more frequently than on a monthly basis. Nonetheless, the volume of coding notices is likely to increase because HMRC will have to change codes more often. This could well mean questions to the payroll department on the reasons behind fluctuations in net pay.
Date: 21st November, 2016
Articles from this Author
20th July, 2017
Uncertain times for winding up transactions
3rd July, 2017
9th June, 2017
27th April, 2017
Government places Making Tax Digital legislation on hold
Contact Business Service Partners
Choose from the drop down menu below to select a Partner to contact.
For the latest Mercer & Hole news, visit our LinkedIn page mercer-&-hole